The internationally accepted definition of sustainable development is referring at the obtaining the satisfaction the needs of the present without compromising the ability of future generations to meet their own needs. Sustainable development is a means tglobalization, crisis, development, institutions.

DAEA ALEXANDRA RENATE

PUIU CARMEN

STANCIU MARIETA

English

Research Papers in Economics

143 
 
REGIONAL DEVELOPMENT AND THE ROLES OF INSTITUTIONS 
 
Daea Alexandra Renate 
University of Craiova, The Faculty of Economimcs and Business Administration, Drobeta Turnu 
Severin, Adrian Street, no.174, Romania alexandradaea@yahoo.com 0723610538 
Puiu Carmen 
University of Craiova, The Faculty of Economimcs and Business Administration, Drobeta Turnu 
Severin, Călugareni Street, no.1, Romania cvpuiu@yahoo.com 0745087609 
Stanciu Marieta  
University  of  Craiova,  The  Faculty  of  Economics  and  Business  Administration,  Craiova, 
Bucharest Road, bl.A18, ap.5, Romania mstanciu@yahoo.com 0743099509 
 
The  internationally  accepted  definition  of  sustainable  development  is  referring  at  the  obtaining  the 
satisfaction the needs of the present without compromising the ability of future generations to meet their 
own needs. Sustainable development is a means to an end, or an approach to decision-making, rather than 
an ideal outcome or final achievement. Development, in this context, is any process that enhances the 
wellbeing  of  people  and  their  environment.  Development  is  sustainable  when  it  achieves  stable  or 
increasing wellbeing over time for both people and the environment.  
 
Keywords: globalization, crisis, development, institutions.  
 
Cod JEL: F4: Macroeconomic Aspects of International Trade and Finance 
 
1. Regional development 
The internationally accepted definition of sustainable development is referring at the obtaining 
the satisfaction the needs of the present without compromising the ability of future generations to 
meet their own needs. Sustainable development is a means to an end, or an approach to decision-
making, rather than an ideal outcome or final achievement. Development, in this context, is any 
process that enhances the wellbeing of people and their environment.  
Development is sustainable when it achieves stable or increasing wellbeing over time for both 
people and the environment. Sustainability is another term often used. Government initiatives 
need to promote growth and innovation by (in each of these areas, government has already made 
moves to strengthen the performance, but more can be done): 
-Enhancing the existing innovation framework. 
-Developing, attracting and retaining people with exceptional skills and talents who are able to 
innovate and increase our overall productivity. 
-Focusing  government  resources  to  maximize  the  impact  of  innovation  across  the  whole 
economy. 
-Focusing  government  resources  to  maximize  the  impact  of  innovation  across  the  whole 
economy. 
Whole regions, especially sub-Saharan Africa and Caribbean/Central America, were virtually 
excluded from the benefits of global economic growth. Despite these sign of distress, there was 
little adverse reaction to globalization until the shocks (the Asian economic crisis from 1997, the 
anti-globalization movements and current global crisis).  
In  order  to  achieve  sustainable  development  were  proposed  the  following  indicators:  for 
population  (population  growth;  ageing  population;  migration;  ethnic  diversity;  regional 
population change) and for economic growth and innovation (economic performance and GDP; 
balance of trade in goods and services; financial status; regulatory and business climate; industry 
and regional development; science and technology).  
Today, the debate over economic development centers on the appropriate role for states and 
market in development process. Economic regionalism has reached flood tide and is having a 144 
 
significant impact on international economy and, at the same time, the nation-state remains the 
dominant actor in both domestic and international economic affairs. (Gilpin, 2001:4) 
The  Rio  Declaration  states  that  human  beings  are  at  the  centre  of  concerns  for  sustainable 
development and that they are entitled to a healthy and productive life in harmony with nature. 
The goals of sustainable development can only be achieved in the absence of a high prevalence of 
debilitating illnesses while population health requires poverty eradication.  
There is an urgent need to address the causes of ill health and their impact on development, with 
particular emphasis on women and children, as well as other vulnerable groups of society such as 
people with disabilities, elderly persons and indigenous people. Fundamental changes in the way 
that  societies  produce  and  consume  are  indispensable  for  achieving  global  sustainable 
development. All countries should strive to promote sustainable consumption and production 
patterns, with the developed countries taking the lead, and with all countries benefiting from the 
process, based on the principle of common but differentiated responsibilities.  
Globalization  will  liberalize  the  world  economy  from  unnecessary  bureaucracy  and  trade 
barriers; when nation states remove all barriers to global competition, the movement of goods 
and  services,  capital,  multinational  operations  and  financial  institutions  will  bring  greater 
efficiency  to  and  better  utilization  of  the  resources  at  international  level.  (Lee  and  Carter, 
2005:12) 
 
2. Governance for sustainable development 
Governments, relevant international organizations, the private sector and all major groups should 
play a critical role in striving to change unsustainable consumption and production patterns. This 
would require urgent action at the international, regional and national levels. Human activities are 
having an increasing impact on the integrity of ecosystems that provide essential resources and 
services  for  economic  activities.  Managing  the  natural  resource  base  in  a  sustainable  and 
integrated  manner  is  essential  for  sustainable  development.  In  this  regard,  it  is  necessary  to 
implement strategies to protect all ecosystems and to achieve integrated management of land, 
water and living resources, while strengthening regional, national and local capacities. 
Governance for sustainable development is about ensuring the processes and institutions are in 
place  to  embed  sustainable  development  approaches  at  the  level  of  the  world  economy. 
Governance for sustainable development is a key issue at the level of international interactions 
also. Good governance is vital in balancing social, economic, environmental and cultural issues 
and therefore in making good sustainable development decisions. For example, the European 
Union defines good governance as: 
-Openness (institutions should work in an open manner). 
-Participation  (the  quality  and  effectiveness  of  policies  depend  on  wide  participation  from 
conception to implementation). 
-Accountability (roles need to be clear and each institution must explain and take responsibility 
for what it does). 
-Effectiveness  (policies  must  be  effective  and  timely  and  decisions  must  be  made  at  the 
appropriate level). 
-Coherence (policies and action must be coherent and easily understood - coherence requires 
political leadership and a strong responsibility to ensure a consistent approach within a complex 
system; regional and local authorities must be involved). 
The  government's  goal  for  regional  development  is  sustainable  economic  growth  for 
communities, as an essential part of sustainable development. Regional development strategies 
focus on local resources and strengths that can support sustainable economic growth. 
 For regions with acute needs, the strategies address inequalities due to weaknesses in the local 
economy, as well as other causes of social and economic disadvantage. Regional development 
concentrates on working with local stakeholders such as local and central government, business – 145 
 
in  order  to  develop  regional  partnerships,  to  create  a  shared  vision  and  to  build  economic 
development capability. 
Working together is pivotal to achieving sustainable development. The roles of the respective 
players are all different, and each has different but significant contributions to make. Sustainable 
development is most likely to be achieved when all sectors interact constructively. Most issues 
cannot be resolved by one sector acting alone. 
 The role of central government is to create the conditions that lead and encourage sustainable 
development at a national level. Within that broad role, government can influence activity in the 
way that it manages its investments (such as research, education and other activities); in the use 
of its powers to pass legislation and to use coercive powers; and in the services and benefits it 
funds or delivers. 
 It can also influence activity internationally by the activities it supports or carries out itself. 
Government activity needs to be based on a reasonable level of community support and it needs 
to be well considered.   
The latest experiences have proved that the sustainability of the market economic system is by no 
means guaranteed. The Asian financial crisis from 1997 clearly demonstrated that the market 
economy is not without its costs. John Dunning distinguishes between three types of failures of 
the capitalist system: 
-A failure of markets: moral hazard, inappropriate macroeconomic politics, excessive speculation 
(property and stock market), an inappropriately valued currency, manipulated exchange rates, 
cross-border and intra-firm transfer prices, bad timing of short-term debts, presence of a strong 
black market and abuse of monopoly power. 
-A failure of institutions: inefficient functioning of the regulatory and supervisory systems, an 
inadequate legal and financial infrastructure, shortcomings in the protection of ownership rights, 
lack of accountability and/or transparency and inadequate standards in financial reporting. 
-A deficiency of moral virtues, which lies at the core of the failure of the markets and institutions. 
(Dunning, 2003:145-146) 
A development strategy has sometimes been likened a map of where the society is going. The 
development process is too difficult for us to write down today a map of where the economy will 
be going over the next ten years because it will require too much information and this knowledge 
is  not  currently  available.  While,  in  principle,  a  development  plan  could  map  out  how  the 
economy would respond to the myriad of different contingencies that might occur in the coming 
years, in practice this is seldom done. By contrast, a development strategy is a living document: it 
needs to set forth how it is to be created, revised and adopted, the process of participation, the 
means by which ownership and consensus is to be obtained, how the details will be fleshed out.     
The development strategy fulfils several functions as it sets forth its vision for the future: 
All societies are resources-constrained; poor countries even more so. Beyond general resource 
constraints are the constraints on the capacity of government, the limitations on the number of 
issues,  which  it  can  pursue.  While  there  are  many  pressing  needs,  it  is  imperative  that  the 
development  strategy  set  priorities.  In  traditional  economic  theory,  prices  perform  all  the 
coordination that is required in an economy. Having a sense of where the economy is going is 
essential: if, for instance, an economy is moving to the next age of development, the appropriate 
infrastructure,  human  capital  and  institutions  have  to  be  in  place.  If  any  of  this  essential 
ingredients is missing, the chances of success will be greatly reduces.  Not only must there be 
coordination  of  different  agencies  within  and  among  levels  of  government,  there  must  be 
coordination between the private sector and the public and among various part of the private 
sector. The process of constructing a development strategy may itself serve a useful function, in 
helping build a consensus not only about a broad vision of the country’s future and key short- and 
medium-term objectives, but about some of the essential ingredients for achieving those goals.       
If the transformation of society is at the centre of development, the question becomes how to 146 
 
bring these changes about; one of the major roles of the development strategy is to serve as a 
catalyst, for example by identifying the areas of a country’s (dynamic) comparative advantage. 
Identifying  these  areas  and  publicizing  such  information  is  a  public  good  and  as  such  is  a 
responsibility of government.   
 
3. Conclusions 
To be effective, this attempt to serve as catalyst will need to embrace the ambitious goal of 
encouraging society-wide transformation. Part of the government’s role as a catalyst is undertake 
projects that can lead to social learning – that means projects from which the country can draw 
widely applicable lessons (for instance about the viability of an industry). 
A project that demonstrates that local participation in education and local control of rural schools 
increases school accountability (as in El Salvador) or student performance (as in Nicaragua) 
could be replicated nationwide (or indeed, even worldwide), with limited additional resources. 
Indeed such local involvement can itself be a catalyst for community-based development efforts 
that  go  beyond  education.  Seeing  development  as  a  transformation  of society  also  has  clear 
implications  for  where  the  locus  of  development  efforts  must  be  and  how  the  process  of 
assistance must be organized. 
-Why imposing change for the outside cannot work. Effective change cannot be imposed from 
outside. Indeed, the attempt to impose change from the outside is as likely to engender resistance 
and give rise to barriers to change, as it is to facilitate change. 
-Ownership  and  participation.  Key  ingredients  in  a  successful  development  strategy  are 
ownership and participation. Ownership is essential for successful transformation: policies that 
are imposed from outside may be grudgingly accepted on a superficial basis, but will rarely be 
implemented as intended.  
In  order  to  achieve  the  desired  ownership  and  transformation,  the  process  that  leads  to  that 
strategy must be participatory; development can not be just a matter of negotiations between a 
donor and the government; development must reach deeper and it must involve and support 
groups  in  civil  society  because  these  groups  are  part  of  the  social  capital  that  needs  to  be 
strengthened  and  they  give  voice  to  often-excluded  members  of  society,  facilitating  their 
participation and increasing ownership of the development process. By involving these groups, 
the  process  of  strategy  formulation  may  be  able  to  elicit  the  commitment  and  long-term 
involvement that is necessary for development strategy to be sustainable. 
-The need for inclusion and consensus building. One of the obstacles to successful development 
has been the limited ability of some countries to resolve conflicts; this ability is an important part 
of  social  and  organizational  capital.  Reforms  often  bring  advantage  to  some  groups  while 
disadvantaging  others.  There  is  likely  to  be  greater  acceptance  of  reforms  and  a  greater 
participation in the transformation process if there is a sense of equity about the development 
process,  a  sense  of  ownership  derived  from  participation  and  if  there  has  been  an  effort  at 
consensus formation.  
Many examples have showed the importance for instance of consensus formation in achieving 
macroeconomic stability. By contrast, a decision to, for example, eliminate food subsidies that is 
imposed from the outside through an agreement between the ruling elite and an international 
agency is not likely be helpful in achieving a consensus - and thus in promoting a successful 
transformation. (Dunning, 2005: 84-95)  
Trade  is  important  for  developing  countries  to  improve  their  access  to  wealth  and  to  their 
participation in the world economy. All the changes happened in the global business environment 
have tremendous political, economic and social implication on the global business environment.  
 
   147 
 
Bibliography: 
1. Stiglitz, Joseph (1998), Towards a new paradigm for development: strategies, policies and 
processes, Geneva: UNCTAD, pp.15-27. 
2. Miskin, Frederic  (2001), The Economics of Money, Banking and Financial Markets – Sixth 
Edition, Addison Wesley. Boston, pp. 306-310. 
3. Lee, Kiefer, Carter, Steve (2005), Global Marketing Management, Oxford University Press, 
New York, pp. 8 ,12, 130. 
4. Krugman, Paul, Obstfeld, Maurice (1994), International Economics: Theory and Practice.Third 
Edition, HarperCollins, New York, pp. 162-163. 
5. Dunning, John (2003), Making globalization good. The moral challenges of global capitalism, 
Oxford University Press, New York, pp. 84-95. 
 
   

Global Marketing Management,

Making globalization good. The moral challenges of global capitalism,

The Economics of Money, Banking and Financial Markets – Sixth Edition,

Towards a new paradigm for development: strategies, policies and processes,

REGIONAL DEVELOPMENT AND THE ROLES OF INSTITUTIONS

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REGIONAL DEVELOPMENT AND THE ROLES OF INSTITUTIONS

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