A shrinking and ageing population will place significant pressure on public finance and multi-level governance frameworks in Nord-Vest. Ageing is forecast to increase fiscal pressure on the central government by around 6.5 percentage points of GDP by 2050, which will also impact subnational governments who are reliant on transfers for 83% of revenue. Shrinking in will result in 26% of local governments in Nord‑Vest having a population below 1 500. An ageing and shrinking population risks increase disparities between urban and rural areas. Responding to these challenges calls for strengthening the inter-governmental fiscal framework, ensuring investments are forward-looking and strengthening multi-level governance.
Preparing for Demographic Change in Nord‑Vest, Romania
Abstract
Effectively responding to long-term demographic change in Nord-Vest calls for proactively adapting the inter-governmental fiscal framework, ensuring public investments are forward-looking and strengthening multi‑level governance structures. By 2050, Nord-Vest is projected to shrink by 15% by 2050, with 24% fewer working-age residents (15-64 years old) and 41% fewer young residents (15-49). It will also age, with a 23% increase in elderly residents (65+). Impacts will be most strongly felt in rural areas. These demographic headwinds will place subnational government finances, public investment and multi-level governance structures under increasing pressure (Box 1.1).
The specific impact of demographic change is linked to the regional dynamics of demographic change, as well as the multi-level governance framework. Three main dimensions of demographic change are shrinking, ageing and urbanisation each have specific impacts on subnational government finances, investment prioritisation and multi-level governance (Table 1.1).
Demographic trends and their potential impact on subnational finance, investment and multi-level governance (assuming all else equal)
Source: Authors’ elaboration based on OECD (2025) Shrinking Smartly and Sustainably; OECD (2022) Delivering Quality Services to All in Alentejo; OECD (2022), Shrinking Smartly in Estonia: Preparing Regions for Demographic Change; Das B and M Skidmore (2018), Asymmetry in Municipal Government Responses in Growing versus Shrinking Counties with Focus on Capital Spending.
Building on the general overview of multi-level governance structure provided in Chapter 2, this chapter examines the specific impact of demographic change on subnational finance, public investment and multi‑level governance in Nord‑Vest. The first section examines county and local government finances and considers the potential impact of demographic change on expenditure and revenue. The second section outlines long-term trends in public investment and highlights current investment priorities, considering how demographic change could alter these priorities. The third section examines the implications for the multi‑level governance framework, including the administrative-territorial structure.
County and local governments in Romania have relatively low fiscal autonomy. As described in Chapter 2, subnational governments in Romania are responsible for 21.5% of total public expenditure, below the OECD average of 34.3%1. Almost half of that expenditure is on investment, well above the OECD average (12%). This expenditure is primarily supported by grants and transfers, which makes up 84% of subnational revenue. However, even though the central government retains primary responsibility for most policy domains and has strong oversight of subnational governments (Box 1.2), county and local governments will face some specific expenditure and revenue pressures due to demographic change.
Romania has a centralised fiscal framework, with county and local government budgets closely overseen by the central government. Law no. 273/2006 on Local Public Finance mandates that local governments prepare an annual budget detailing revenues and expenditures for approval by the central government. County and local governments prepare budgets in accordance with a framework letter for the budget cycle, the central government budget and past budgets. A large majority (84%) of subnational revenue is from transfers, which are allocated on an annual basis (see discussion). Transparency and access to local government budgets remains a challenge, with high reliance on non-digital formats for budgets. In the Nord‑Vest region, county and local governments publish budgets but the formats used – scanned PDFs in 4 out of 6 counties – render information difficult to access and use.
County and local governments will face some expenditure pressure
County and local government expenditure in Nord-Vest amounts to RON 10.9 billion per annum, with local governments responsible for 78% of that amount in 2021. This represents 7.4% of regional GDP and RON 3 847 per inhabitant, slightly above the Romanian average (RON 3 560 per capita or 6.0% of Romanian national GDP). As described in Chapter 2, county governments are primarily responsible for economic affairs (especially county roads, airports and other networked infrastructure) and social protection (child and disability allowances, social services and social assistance). Local governments responsibilities relate to economic affairs (local roads and public transport), housing and community affairs, education (school infrastructure) and social protection (child protection, elderly protection and social services).
Subnational expenditure has risen, driven by a substantial increase in capital expenditure, especially for economic affairs
Over the last 10 years, subnational government expenditure has grown significantly in Romania and Nord‑Vest. Total subnational government expenditure in Romania was 25.8% of general government expenditure (9.2% of GDP) in 2014 and reached 21.7% of general government expenditure (9.4% of GDP) in 2024. In Nord‑Vest, county and local government expenditure (in real 2021 terms) increased from RON 2 894 per capita in 2011 to RON 3 847 per capita in 2021, a real increase of almost a third. Local governments accounted for 84% of the nominal expenditure growth per capita between 2011 and 2021, primarily driven by an increase in general public services (+194% increase), social protection (+301% increase) and economic affairs (+205% increase) (Figure 1.1). Between 2011 and 2021, most (58%) of the nominal increase in local government expenditure per capita in Nord-Vest was due to an over four-fold increase in capital expenditure per capita (Figure 1.2).
County and local government spending in Nord Vest by function of government (2011), RON per capita
Note: Data from the regional and municipal finance databases differs from the subnational government sector in the national accounts. This is primarily due to coverage differences between the two, as the regional and municipal finance databases include only county and local governments and excludes other subnational-level entities that are included in the national accounts.
Source: OECD Subnational Government Finance and Employment Statistics, Disaggregated municipal government finance, DSD_SNGF_AGG@DF_MUNIFI; Disaggregated regional government finance, DSD_SNGF_DISAGG@DF_REGOFI
County and local government spending in Nord Vest by category (2011–2021), RON per capita
Note: Capital expenditure in yellow. Current expenditure in shades of blue.
Source: OECD Subnational Government Finance and Employment Statistics, Disaggregated municipal government finance, DSD_SNGF_AGG@DF_MUNIFI; Disaggregated regional government finance, DSD_SNGF_DISAGG@DF_REGOFI
Subnational government budget pressures from demographic change are mainly related to health and social protection
Demographic change is expected to most significantly impact health, social protection and education, which together accounted for 42% of subnational government in Nord-Vest in 2022. In 2022, subnational governments in Romania were responsible for 27% of public expenditure on economic affairs (22% of subnational expenditure), 38% of public expenditure on healthcare (21% of subnational expenditure), 8% of social protection (12.8% of subnational expenditure) and 69% of housing and community amenities (10% of subnational expenditure) (Figure 1.3).
Subnational government spending by function in Romania and EU (2022), share of general government spending in same function
Source: OECD National Accounts, Annual government expenditure by function, DSD_NASEC10@DF_TABLE11
Healthcare costs for subnational governments are expected to increase as a result of demographic change, but increases should be matched by additional transfers. As described in Chapter 5, ageing will increase demand for healthcare services. Subnational governments have a role in running most public hospitals (80%) (Duran et al., 2018[3]) and have other responsibilities related to public and community health (see Chapter 2 and Chapter 5). However, most current health expenditure is directly paid from the state budget to hospitals via National and District Health Insurance Houses, meaning that subnational governments may be partly shielded from impacts of an ageing population. In practice, however, the national government could face significant fiscal pressure from population ageing, which may put at risk transfers for health spending at the subnational level (OECD, 2024[4]).
Social protection costs are also expected to increase due to ageing. As outlined in Chapter 2, the central government is responsible for pensions, but subnational governments are responsible for long-term care. With 19.2% of the population in Nord-Vest already aged 65 or over—a figure projected to rise to 27.7% by 2050—the need for elderly care services will increase rapidly. Despite this, long-term care provision remains severely underdeveloped in Romania, particularly outside major cities (World Bank, 2022[5]). Unclear service standards and limited co-ordination between the social care and health sectors have resulted in overlapping measures and inadequate coverage. Overall, subnational governments across Romania have limited expenditure responsibilities, with social protection accounting for 8% of total public expenditure, below the EU average of 18% (Figure 4.3), and less than 3% of old-age social protection. For localities that do provide long-term care, services are primarily funded through the transfer system based on existing demand. However, while the role of subnational government is currently limited, population ageing and reforms to increase access to aged care could result in higher spending on social protection in the future (Ministry of Labour, Family, Youth and Social Solidarity, 2022[6]). Subnational governments reliance on national transfers to fund these services may result in mounting fiscal pressure to meet growing demand (EuroCarers, 2023[7]).
Although education costs per capita may increase, the impact on the overall education budget is unclear, and might even decrease due to declining enrolment. In any case, the fiscal impact on county and local governments may be limited. In Romania, following the 2015 reform to re-centralise education, subnational governments only account for 22% of public spending on education, far below the EU average of 66%. Most of this expenditure is linked to capital investment on primary and secondary school facilities and is directly supported by transfers. As such, impacts to education expenditure will primarily be felt by the central government. Nonetheless, subnational governments may still be exposed due to higher costs needed to maintain, renew and construct schools while adapting the school network to demographic trends.
County and local governments remain highly dependent on transfers
Subnational governments in Nord-Vest are highly reliant on shared taxes and grants. In 2024, grants and subsidies (including shared taxes) represented 83.4% of subnational government revenue in Romania, well above the EU27 average (45.7%). Taxes represented 8.6% of subnational government revenue, well below the EU27 average (40%). Other subnational government revenue sources include user charges and fees (6.4% of total) and income from assets (1.6% of total). Shared taxes make-up a significant part of subnational government revenue in Romania, and by extension in Nord-Vest. These taxes (namely personal income tax and value-added tax) are collected by the Ministry of Finance and re‑distributed to county and local governments (partly by formula), meaning they are functionally analogous to grants seen in many countries, and are classified as such in the System of National Accounts.
According to disaggregated revenue statistics collected by the OECD, grants and subsidies (excluding PIT) made up 48.5% of locality revenues and 70.4% of county revenues in Nord-Vest for 2021 (Figure 1.4), similar to the 47.8% for Romanian localities, but higher than the 55.2% for Romanian counties. Reliance on shared taxes and grants has fluctuated over the past decade. For localities, they reached as high as 59% of revenue in 2015 and as low as 43% of locality revenue in 2018, partly reflecting changing EU funding levels.
County and local government revenue in Nord-Vest by source (2011–2021), RON per capita
Note: Other grants and subsidies calculated by subtracting capital and current grants from total grants and subsidies.
Source: OECD Subnational Government Finance and Employment Statistics, Disaggregated municipal government finance, DSD_SNGF_AGG@DF_MUNIFI; Disaggregated regional government finance, DSD_SNGF_DISAGG@DF_REGOFI
High reliance on grants and subsidies, especially earmarked grants, means that county and local governments have limited fiscal autonomy—it also exposes them to national fiscal pressures. High reliance on earmarked grants indicates top-down decision-making, leaving county and local governments limited room to experiment with and tailor spending to advance local priorities and tackle demographic challenges. It can also reduce incentives to improve local implementation efficiency and capacity (Guess, 2013[8]). Furthermore, the increasingly fiscally constrained national government may have less fiscal space to continue high levels of transfers to subnational governments (Box 1.3). This creates a need to improve the efficiency and transparency of transfer systems and mitigate dependence on transfers by increasing own‑source revenues.
Tax revenues in Romania remain well below what is needed to fund ongoing government spending, resulting in a significant national budget deficit. In 2023, Romania’s tax revenues were equivalent to less than 16.3% of GDP, significantly lower than the EU average of 26.1% of GDP (OECD, 2024[9]). This contributed to a deficit, with general government revenues equivalent to 34.0% of GDP compared to public expenditure at 40.6% of GDP. Although tax revenues on consumer goods and services as a share of GDP are in line with the EU average, Romania has the highest VAT tax gap in the EU due to widespread evasion and exception (European Commission, 2022[10]). EU debt sustainability analysis highlights a high medium‑term risk to fiscal sustainability due to large deficit (8.7% in 2024), rising debt and sensitivity to adverse shocks (European Commission, 2022[10]). OECD debt projections show that general government debt could rise from 48.1% of GDP in 2023 to around 91.8% of GDP by 2050 without tax or spending reforms. Reducing this will require robust consolidation efforts, which risks reducing fiscal space for transfers (OECD, 2024[4]).
The fiscal position of Romania is partly worsening due to population ageing. Among EU and OECD members, Romania is estimated to experience higher than average increases in ageing-related spending (Figure 1.5), with an increase of 2 percentage points of GDP from healthcare and long-term care, and 4.5 percentage points of GDP due to pension pressure (OECD, 2024[9]).
Estimated increase in ageing-related fiscal pressure in Romania and OECD countries (2024–2050), percentage points of GDP
Note: Romania highlighted in teal. OECD average unweighted and excluding Chile, Colombia, Costa Rica, Mexico and Turkiye.
Source: OECD (2024), OECD Economic Surveys: Romania 2024, https://doi.org/10.1787/106b32c4-en
Personal income tax is an important source of revenue, with some distributional elements
Distribution of personal income tax (PIT) revenue has a central role in county and local government financing, providing a key source of discretionary revenue. PIT is collected by the national government and redistributed to the county and local governments. In 2021, transfers from PIT revenue represented 24% of county and 28% of local government revenue in Nord-Vest. PIT allocation goes mainly to the locality where the tax was generated, although there are equalisation elements in the formula. According to Law no 273/2006, four-fifths of the distribution from the PIT is redistributed to counties and cities where it was generated, leaving one-fifth for equalisation purposes, with 14% of total PIT revenue allocated through formula-based equalisation (Box 1.4).
PIT is collected by the central government, which redistributes it to county and local authorities based on the criteria specified in Law no. 273/2006 on Local Public Finances (amended by Law no. 286/2020). According to Article 32 of this law:
15% is assigned to county budgets where the tax was generated
65% is designated for the cities, towns and communes where the tax was generated (‘quota portion’)
6% is distributed to localities at the discretion of the county council through a two-stage process: in the first stage (80% of the allocation), only counties with lower-than-average PIT per capita receive an allocation that is based on population (75%) and built-up area (25%). In the second stage, the remainder is distributed to all administrative-territorial units, based on income tax collected per inhabitant in the previous year.
14% is allocated for equalisation (‘balancing payment’), with 85% to balance the budget of local governments and 15% to balance county government budgets. Equalisation is based on a weighted formula that considers fiscal capacity based on income tax per inhabitant (70%) and land area (30%) (see Article 33).
Article 33 of the Law (amended by Law no. 246/2022 and Emergency Ordinance no. 168/2022) also establishes specific criteria for the redistribution for localities within Metropolitan Areas or Administrative Consortia. For localities within a Metropolitan Area, 30% of PIT is allocated to localities where employees reside, while 70% is allocated to the localities where they are employed. For localities within an Administrative Consortia, 60% of PIT is allocated to the localities where work is conducted, and 5% is directed to the budget of the administrative consortium to which these localities belong. This last provision will come into effect on January 1, 2026.
Source: Law No. 273/2006 on Local Public Finances, https://legislatie.just.ro/Public/DetaliiDocument/73527
At the locality level, PIT revenue can vary significantly. In 2021, the amount received ranged from RON 113 per capita in Vadu Izei to RON 5 533 per capita in Jucu (Figure 1.6). Localities with smaller and shrinking populations tended to receive additional balancing payments, but within this group the amount of balancing payments received differed greatly. Even with the balancing payments, there are considerable differences in PIT revenue.
Personal income tax in Nord Vest by locality and component (2021), nominal RON per capita
Note: The quota portion refers to the 65% of total PIT that is returned to the locality where it is generated. The balancing portion refers to the 14% of total PIT allocated to balance locality and county government budgets (of which 85% are for locality governments). Together, the quota and balancing portions make up the total locality PIT revenue as shown above. The remaining 21% of PIT go to county governments, consisting of 15% returned to the county where the PIT is generated and 6% for the county council to further distribute to localities at their discretion. For more information see Box 4.4. Source: OECD calculations based on data received from the Ministry of Development, Public Works and Administration.
Overtime, insufficiently re-distributive fiscal transfers may risk worsening local demographic decline and increase disparities between urban and rural areas. Many OECD countries adopt comprehensive fiscal equalisation policies to re-distribute state resources so that subnational governments can provide basic service levels (Dougherty and Forman, 2021[11]). While the system in Romania does distribute funding to areas with lower PIT revenue (Figure 4.6), the extent of these transfers appears to be limited in terms of overall revenues and inequality. Research suggests that fiscal policies in Romania has been insufficient to reduce inequality and poverty, with disparities in local revenues in Romania exceeding those of local GDP per capita (Gavriluta (Vatamanu), Onofrei and Cigu, 2020[12]) and ineffective fiscal equalisation in Romania failing to reduce regional and local inequalities (Szabo, 2016[13]).
Furthermore, Romania has the lowest PIT rate in the EU (10%) and various loopholes and exemptions exist (IMF, 2022[14]). PIT collection is complex, with the PIT is divided into ten categories each with distinct rules for assessment, calculation and declaration (OECD, 2024[4]). Certain categories of income, such as the construction sector and IT specialists, enjoy tax exemptions or favorable treatment, placing significant costs on the state budget (IMF, 2022[14]), though Romania has made progress to eliminate man of these exemptions. The complexity of the system can result in errors and lead to underreporting, evasion and complications in tax audits (Romanian Fiscal Council, 2022[15]). As a result, various proposals have been made to reform the PIT collection system, such as shifting from a flat income tax rate to a progressive one and eliminating certain exemptions (IMF, 2022[14]).
VAT-sharing is an important revenue source revenue, but lacks a clear allocation formula
The VAT-sharing system in Romania is an important source of funding for county and local governments. In 2021 in Nord-Vest, revenue from VAT made up 23% of local government revenue and 37% of county government revenue, comparable to the ratio across Romania (OECD, 2024[16]). In Nord-Vest, the allocation of VAT in 2021 ranged from RON 232 per capita in Baciu to RON 2 693 per capita in Zelha (Figure 1.7). Smaller localities tended to receive more VAT revenues per capita, largely due to the portion of VAT allocated to balance locality budgets.
Locality VAT revenues in Nord Vest by population (2021), RON per capita
Source: OECD calculations based on data received from the Ministry of Development, Public Works and Administration
Allocation of VAT is complex and lacks a transparent rationale. The VAT-sharing system is better understood as a “pseudo-sharing” system that provides earmarked grants, as allocation is not linked to local VAT revenue (Leonardo et al., 2006[17]). Unlike PIT-sharing, VAT-sharing is earmarked to specific functions – primarily social services (notably child protection, elder care and special education units) and roads, but also several geographic and project-based funding streams (Parliament of Romania, 2023[18]). Until 2015, the VAT-sharing system had also funded teacher salaries. Despite its importance, the VAT-sharing system is opaque, with the allocation requiring five separate annexes in the state budget and limited rationale provided (Parliament of Romania, 2023[18]).
County and local governments could potentially reduce dependence on transfers and improve land use efficiency by better mobilising property taxes
Property tax holds significant potential as a source of local revenue, but the current property tax system is complex and generates limited revenue. Property taxes in Romania are low compared to OECD average (OECD, 2024[4]), accounting for only 0.46% of GDP in 2024, as compared to the OECD average of 1.5% (OECD, Forthcoming[19]). According to Law no. 227/2015, county and local governments can place taxes on residential and non-residential buildings or land, with company‑owned properties assessed based on market value, while the taxable value of dwellings and land is determined by area. County and local governments have discretion in setting tax rates within national guidelines (IMF, 2022[20]).
Despite its potential as a stable local revenue source, Romania’s property tax system remains underutilised due to structural and administrative limitations. The reliance on a rigid calculation system and outdated area-based valuations—rather than market-based assessments—leads to under-taxation, particularly in rapidly growing urban areas (Friedrich-Ebert-Stiftung, 2020[21]). In addition, local governments frequently face capacity constraints, limit their ability to carry out comprehensive and up-to-date property valuations (IMF, 2022[20]).
Land and property taxes can also be used to encourage more efficient allocation of housing resources in the context of a shrinking population. As described in Chapter 3, demographic change is decreasing the efficiency of land use in Nord-Vest. Property and land taxes can be effective instruments to improve land use efficiency. In particular, land value taxes can help mitigate urban sprawl by making underused land more expensive to hold. Since land value is independent of use—whether it is vacant, underdeveloped or built upon—a land value tax encourages higher-density development and prevents land hoarding (OECD, 2022[22]). Separately, property tax and capital gains tax policies could also be refined to discourage individuals from maintaining secondary homes or rural family houses to avoid administrative burdens by imposing higher tax rates on non-primary residences, which is a particular challenge in Nord-Vest.
Nord-Vest is undergoing a public investment boom that is underpinning development of the region. Ongoing investment is helping enhance connectivity, support urban development, facilitate industrial development and improve public services. This can create new job opportunities and improve quality of life, ultimately enhancing attractiveness for all residents in Nord-Vest and reducing youth out-migration. Yet, funding for investment is ultimately limited, so investments also need to be effective. Making the most of public investment in the context of demographic change in Nord‑Vest requires proactively understanding population projections and choosing investments that align with future needs, effective coordination across and among levels of government, and sufficient capacity.
Nord-Vest is experiencing a public investment boom
Public investment has risen across Romania, with subnational governments now carrying out around half of that investment. In 2022, public investment in Romania reached EUR-PPP 1 690 per capita in nominal terms, or 5.3% of GDP (Figure 1.8) (OECD, 2024[23]). This compares with EUR-PPP 1 423 per capita in nominal terms across OECD countries, or 3.5% of GDP. Despite the limited role of subnational governments in total public expenditure, the share of public investment undertaken by subnational governments in Romania is comparable to that of the OECD average, around 55%.
Public investment in OECD and EU countries (2022), share of GDP and subnational share of general government investment
Note: OECD average weighted. Public investment refers to direct investment by the general government sector. Source: OECD National Accounts, Annual government non-financial accounts and key indicators, DSD_NASEC10@DF_TABLE12_EXP
Public investment growth has been mainly at the subnational level
Public investment rose substantially following Romania’s accession to the EU in 2007, particularly at the subnational level. Nonetheless, public investment in Romania has been somewhat volatile in the past decade, reaching as low as EUR 465 per capita (in real 2015 EUR-PPP) in 2017. Since then, however, public investment more than doubled to EUR 1 008 per capita (in real 2015 EUR-PPP). Subnational public investment has grown even more quickly. Between 2003 and 2023, subnational public investment per capita in Romania more than quadrupled in real terms, reaching EUR 543 per capita (in real 2015 EUR-PPP) in 2023, which represented 54.5% of total public investment (Figure 1.9).
Gross fixed capital formation in Romania by sector (2000–2023), real terms indexed to 2000
Source: OECD National Accounts, Annual government non-financial accounts and key indicators (expenditure), DSD_NASEC10@DF_TABLE12_EXP; Annual GDP and components – expenditure approach, DSD_NAMAIN10@DF_TABLE1_EXPENDITURE
Subnational public investment levels in Nord-Vest have increased significantly, in line with the region’s development (Figure 1.10). Between 2011 and 2021, public investment at the locality level more than quadrupled in nominal terms from EUR-PPP 138 per capita to EUR‑PPP 515 per capita, reaching EUR-PPP 1.46 billion in total. This is above the Romanian average of EUR-PPP 382 per capita (total EUR-PPP 7.6 billion) at the locality level. The level of public investment at the county level is lower (at EUR-PPP 157 per capita) and in line with the Romanian average, but has increased in recent years faster than the Romanian average.
Locality and county level public investment in Nord-Vest (2011–2021), nominal EUR-PPP per capita
Source: OECD Disaggregated Municipal and Regional Government Finance Databases, DSD_SNGF_AGG@DF_MUNIFI and DSD_SNGF_DISAGG@DF_REGOFI
Most subnational investment is in economic affairs and housing
Subnational governments in Romania invest heavily in economic affairs, which made up 41% of total investment in 2022, well above the EU average of 30% (Figure 1.11). This is followed by housing and community amenities (19%) and education (12%). Subnational governments in Romania have an especially important role for investment in education and health – where they account for 73% and 72% of total public investment in these sectors, respectively. Nonetheless, they have limited responsibility for current expenditure in these areas and investment overseen by the central government.
Subnational public investment by function of government (2022), share of total subnational public investment and share of general government investment in each function
Source: OECD National Accounts, Annual government expenditure by function, DSD_NASEC10@DF_TABLE11
Levels of public investment vary considerably at the locality level
Despite high overall investment levels, per capita investment varies considerably across localities in Nord‑Vest. There does not appear to be a correlation between investment levels, population and population changes (Figure 1.12). One potential explanation for the variation is that economic affairs (which includes transport) disproportionally occurs in rural areas (e.g., upgrade of rural roads), which makes up a large share of local public investment and results in high investment per capita. Indeed, there are major efforts to upgrade roads and highways across Nord‑Vest, which is often delegated to local government. These investments tend to occur disproportionally outside cities resulting in more transport investment to rural areas. Ultimately, improvement in the transport network could strengthen urban-rural linkages and support the spill-over of benefits accruing in growing cities. This may balance out other investments in education and healthcare, which tend to occur in areas with growing populations.
Direct investment by localities in Nord-Vest (2021), million leu (left) and leu per capita (right)
Source: OECD Disaggregated Municipal Government Finance Databases, DSD_SNGF_AGG@DF_MUNIFI
Subnational investment in Nord-Vest relies heavily on transfers
Rising capital transfers have supported growing investment by county and local governments in Nord‑Vest (Figure 1.13). In 2022, net capital transfers (capital transfers received less capital transfers spent) funded around half of total local public investment in Romania, well above the level in 2012 (24%) and 2002 (12%). The remainder of public investment is supported by gross savings, which is the difference between current expenditure and revenue. Gross savings has decreased in importance, though it has remained somewhat stable in per capita volumes. Local government borrowing for investment has been low or negative in recent years, potentially due to local government borrowing constraints.
Funding and financing sources for subnational public investment in Romania (2000–2022), real 2022 EUR-PPP per capita
Note: Where direct investment spent = gross savings received + net capital transfers received + net lending received. It excludes indirect investment (i.e. capital transfers spent) which is netted out of capital transfers received. OECD averages weighted.
Source: OECD calculations based on OECD National Accounts, Annual government non-financial accounts and key indicators, DSD_NASEC10@DF_TABLE12_EXP
Nord-Vest is particularly reliant on EU transfers for public investment, with almost all county and local government investment funded by EU transfers (Figure 1.14). County and local governments Nord‑Vest have successfully received EU funding that has supported public investment. According to data provided from the Ministry of Development, Public Works and Administration, in 2021, local governments in Nord-Vest received EU transfers equivalent to 117% of their capital expenditure, while for county governments that amount was almost 300%. Given dependence on capital transfers for investment, it is perhaps not un-usual for this ratio to exceed 100% in a single year since funds received in one year may be spent over time, which partly explains its volatility. Nonetheless, such a high ratio reflects Nord-Vest’s reliance on EU funds for investment. High levels of EU transfers received – as well as planned additional spending from cohesion policy, RRP and national funds – suggest that public investment levels could remain high in Nord-Vest over the next few years.
EU transfers received by Nord-Vest county and local governments (2011–2021), as share of capital expenditure
Source: OECD calculations based on data received from the Ministry of Development, Public Works and Administration.
Nord-Vest’s higher investment levels relative to other Romanian regions can be partly attributed to its ability to attract EU funds. Between 2017 and 2021, the top three counties in terms of European transfers to county and local governments were in Nord-Vest – indeed Nord-Vest accounted for 23% of the Romanian total (Figure 1.15). Over this period, county and local governments in Cluj and Bistrita-Nasaud have received European transfers almost two-and-a-half times that of the median Romanian county, reflecting their economic potential and capacity to manage investments.
European transfers to locality and county governments in Romania (cumulative 2017–2021), million RON
Note: Nord-Vest highlighted in dark blue and other Romanian regions in teal.
Source: OECD calculations based on data received from the Ministry of Development, Public Works and Administration.
Though EU funding has been essential to support Nord-Vest’s development, over-reliance on EU funding could present a risk for public investment in the future. As Nord-Vest and Romania become more developed, counties and localities in Nord-Vest will need to identify new sources of funding for investment. Indeed, there is room to further mobilise local and national-level funding tools, such as land value capture, property taxes, capital gains taxes and the state budget to support investment and ongoing maintenance (see earlier discussion).
Investment programmes in Nord-Vest focus on boosting development, which can increase regional attractiveness
Nord-Vest benefits from a range of investment programmes organised under territorial and sectoral plans (Table 1.2). The North-West RDA oversees the main territorial programme – the Nord-Vest Regional Programme, which takes a place-based and cross-sector approach to investment. Several national level programmes also invest in Nord-Vest, often administered by sectoral ministries through county directorates. These regional and national-level investment programmes tend to focus on making Nord-Vest more competitive and attractive.
Source: Authors’ elaboration based on review of relevant documents.
Regional and local level investment programmes are focused on attractiveness
The North-West RDA has an important role in planning, co-ordinating and facilitating public investment at the county and local levels. While it does not have direct decisions-making authority over public investment, it serves as an intermediary between national authorities, subnational governments and EU institutions.
The Nord-Vest Regional Programme (RP) is the main investment programme at the regional level in Nord-Vest. It takes a holistic investment approach to improve Nord-Vest’s economic performance, quality of life and regional attractiveness. It includes seven priorities, as well as dedicated funding for technical assistance (North-West RDA, 2021[24]). Notably, urban mobility accounts for 21% of the funding, recognising the growing need for sustainable mobility in Nord-Vest’s growing cities. The largest priority by funding, competitiveness, includes 22% of total funding, primarily supporting research and development initiatives and skills in the private sector. As of May 2025, the North-West RDA has made good progress implementing the ROP (Box 1.5).
The North-West RDA is actively implementing the ROP. As of May 2025, 285 contracts have been signed or are in the contracting procedure. These have a total project value of EUR 2.3 billion, with an ROP eligible funding budget of EUR 1.6 billion (Table 1.3). The North-West RDA received 1885 submitted projects, with a total project value of over EUR 6.0 billion.
Almost 330 payments have been made already, totalling EUR 232 million, or 16% of the ROP budget. Of the 450 milestone indicators included in the ROP, 311 have already been achieved, 18 are ongoing and 121 were not achieved. Signed contracts are contributing to projects across the region to a diverse group of beneficiaries.
Source: (North-West RDA, 2025[25]), 2025 May Issue North-West Region, https://regionordvest.ro/wp-content/uploads/2025/06/May_2025_Monthly_Overview.pdf
Though there are references to demographic change throughout the Nord-Vest Regional Programme, they are largely limited to urban mobility and education, and do not include explicit demographic projections. For example, the ROP considers local or micro-regional demographic trends as one of the main prioritisation criteria for education investment, alongside those in isolated communities and those serving marginalised groups. However, the funding is limited, with investment in education infrastructure (RSO4.2 and RSO5.1) representing only 2.6% of the total ROP (Figure 1.16), though the broader priority Educated Region accounts for 5.4% of funding due to additional funding for culture and tourism (North-West RDA, 2021[24]). As of June 2025, 24 project contracts have been issued within the Educated Region priority totalling RON 404 million of support for projects together worth RON 619 million (of which half had universities as beneficiaries) (North-West RDA, 2025[26]). Further support for schools and vocational centres should be forthcoming, as the ROP identifies equal access to quality education, training and lifelong learning a major priority (Ministry of Investment and European Projects, 2021[27]), which would further contribute to talent development in the region.
Nord-Vest Regional Operation Programme allocation by area, million EUR
Source: European Commission, Cohesion Open Data Portal, https://cohesiondata.ec.europa.eu/
The North-West RDA also has an important role in health investment. The Nord-Vest Intermediate Body for Health (under the North-West RDA) is the implementing authority for health infrastructure under the joint ERDF and ESF+ funded Health Program, investing in health infrastructure that is not covered by the ROP. It aims to support implementation of the National Health Strategy 2023–2030. The Health Program includes over EUR 5.8 billion worth of health investments across Romania (including EUR 5.3 billion for hospitals), with the ongoing construction of the Cluj Regional Hospital one of its flagship investment projects to healthcare quality and efficiency in the region (Chapter 5).
National level investment programmes
The key national level investment programmes include the Anghel Saligny National Investment Program, the Romanian Recovery and Resilience Fund and various sectoral investment programmes.
Anghel Saligny National Investment Program in Nord-Vest
The Anghel Saligny National Investment Program is the main investment programme by the Ministry of Development, Public Works and Administration. Economic infrastructure such as transport and water make up a large share of total investment within Anghel Saligny. As of September 2024, 57% of Anghel Saligny funding in Nord-Vest went toward transport infrastructure, followed by 35% to water and waste water infrastructure (Figure 1.17). There is room to further align investment programmes with policy goals. For example, almost 8% of Anghel Saligny investment in Nord-Vest goes to natural gas networks, yet gas network investments may be risky if they become stranded assets as natural gas prices rise and as households and firms transition to greener alternatives.
Contracted and settled Anghel Saligny investment in Nord-Vest by sector (as of September 2024), million RON
Source: OECD calculations based on Ministry of Development, Public Works and Administration (2024), Anghel Saligny implementation March 2025, https://www.mdlpa.ro/pages/anghelsaligny
Romania’s Recovery and Resilience Plan in Nord-Vest
The Recovery and Resilience Plan (RRP) aims to help Romania become more sustainable, resilient and prepared for green and digital opportunities. It includes EUR 28.5 billion across Romania, including EUR 13.6 billion in grants and EUR 14.9 billion in loans. The largest components are sustainable transport (26% of total), education (12%), business support (8.6%), green building renovation (7.7%) and local funds (6.4%). Of the 179 localised projects in the RRP, 49 are in Nord-Vest (funded across 29 packages) (Figure 1.18). Notable projects include the electrification of the Cluj-Napoca-Oradea railway line, progress towards the TEN-T road network, rooftop solar panels, medical equipment and cultural initiatives.
RRP projects in Nord Vest by sector and location
Source: European Commission, Romania’s Recovery and Resilience Plan, https://commission.europa.eu/business-economy-euro/economic-recovery/recovery-and-resilience-facility/country-pages/romanias-recovery-and-resilience-plan_en
Nord-Vest will also benefit from national level RRP projects, including an e-Health system (EUR 442 million), a reform of long-term care services through the National Strategy on Long-Term Care and Active Ageing 2023–2030 and grants for 1 750 education units with high early drop-out rates to support students entering upper secondary education. Over the 2014–2020 programming period, cohesion policy funded a total of around EUR 2.8 billion in Nord Vest, with energy and transport infrastructure and social inclusion making up almost half of total investments (Box 1.6).
Project data from the European Commission shows that, across the 2014–2020 programming period, cohesion policy invested a total of EUR 2.8 billion over 1 310 projects wholly located in the Nord-Vest region. Nord-Vest accounted for 7% of the value of total cohesion investment in projects wholly in Romania (EUR 40 billion invested over 15 271 projects). The largest investments in Nord-Vest went to transport and energy infrastructure (28%), social inclusion (18%) low-carbon economy (16%) and environmental protection (14%). Other sizeable investments occurred in education (including vocational education), SME competitiveness and research and innovation. Of the investments located within a single county, over one third occurred in Cluj County, followed by almost one fifth in Satu Mare County and over one seventh in Bihor County.
Source: European Commission, Kohesio, https://kohesio.ec.europa.eu/en
Health sector investments in Nord-Vest
Health investment has risen in Romania, especially at the subnational level. Subnational investment in public health more than doubled between 2018 and 2022 across Romania, partly reflecting recent investments to upgrade hospital infrastructure. Despite rising investment, overall investment in public health remains low compared to the EU average, with 6.6% of total general government investment on health in Romania, compared to 13% across EU. This health investment has been focused on hospitals and there is limited investment to address other weaknesses in the healthcare sector, notably outpatient care and public health (Figure 1.19). Indeed, despite the recognised need to improve availability and uptake of outpatient care, there was no investment at the subnational level (and less than 1% of total health investment at the central government level). This could pose a risk to the health system as the population ages (see Chapter 5).
Health investment by category in Romania (2018–2022), million RON
Source: OECD National Accounts, Annual government expenditure by function, DSD_NASEC10@DF_TABLE11
Ensuring public investment is effective will remain a priority for Nord-Vest
Public investment has been effective at improving economic performance and living standards in the Nord‑Vest region, but there is still room to improve. In the face of potential headwinds – such as population decline, rising government deficits and changes in external funding sources – Nord-Vest will need to invest effectively to maximise long-term development. The long-lived and often networked nature of investment projects calls for a forward-looking and integrated approach to public investment. This requires focusing on better understanding future needs, enhancing cooperation across and among levels of government, and building public sector capacity. Addressing multi-level governance challenges will be key for Nord‑Vest to continue development amidst demographic change (OECD, 2019[28]; OECD, 2025[29]).
Demographic change will increase pressure on the centralised and fragmented multi-level governance structure in Nord-Vest. Developing an effective response will require rethinking policy frameworks, governance structures and collaboration mechanisms. It will also require boosting the capacity of county and local governments.
Ensuring a clear and coordinated policy response to demographic change across levels of government
All levels of government in Romania will need to adjust their policies to better respond to demographic change. As described in Chapter 2, the central government in Romania has primary responsibilities across most policy domains related to demographic change, with RDAs and county and local governments having a more limited role. Nonetheless, county and local governments have a role to identify local development priorities, provide local public services and deliver investments to improve local quality of life. This can ensure local services are adapted to the changing population and ensure strategies and investments are improving the attractiveness of local communities for youth. The North-West RDA has a key role to efficiently allocate resources across the region to promote development.
The central government has adopted a range of sectorial policies relating to demographic change, but lacks a forward-looking territorial development strategy
The Romanian Government has adopted a broad range of sectorial policies that seek to both shape demographic trends and adapt to those trends. As described in Chapter 2, strategies seeking to shape demographic trends include policies on fertility and families (FamilyStart, Sfânta Ana), as well as supporting the return and (re)integration of Romanian citizens living abroad (National Strategy for Romanians Abroad 2023-2026). Strategies that aim to adapt public services relate to aging (National Strategy on Long-Term Care and Active Aging 2023-2030), education and employment (Education and Employment Program 2021-2027), among other areas. Although sectorial strategies are developed with consultation between ministries, Romania does not have an overarching strategy to help coordinate these strategies across sectors and levels of government as exists in countries like Spain with its Plan of 130 Measures to Address the Demographic Challenge.
Lack of a national territorial development strategy increases fragmentation of policies related to demographic change and makes it harder to prioritise investments. Although Romania’s Territorial Development Strategy (Polycentric Romania 2035) was developed around 10 years ago, in accordance with Law no. 350/2001 and adopted by the government in 2017; it is still awaiting to be fully enacted through legislation, leaving a gap in territorial planning. This strategy proposed a polycentric development model for Romania through the development of multiple hubs that encourage more balanced development throughout the territory (Government of Romania, 2017[30]). Revisiting and adopting the strategy could provide clarity for efficient prioritisation of investments across the territory between the capital, secondary cities, county capitals and other major cities and towns, which can subsequently impact migration flows within the country. A national territorial development strategy could help ensure that government policies are coordinated across sectors and provide strategic direction for county and local authorities.
Furthermore, national strategies do not always include forward-looking population projections. Despite population projections being produced at the national, regional, county and grid levels by the National Statistical Institute, these are not always used. Instead, strategies typically focus on past trends. For instance, the National Employment Strategy 2021-2027 examines historical trends in working-age population but it does not include projections. This is not always the case, and some strategies do take a more forward-looking approach, as is the case with the Long-Term Care and Active Aging for 2023-2030 strategy, which does include projections of aging and old-age dependency ratios.
The growing role of the Nord-Vest Regional Development Agency is providing an opportunity for more coordinated and strategic investment
Romania’s RDAs have an increasing important role in coordinating investment. Since the creation of RDAs, following the adoption of Law no. 151/1998 on Regional Development, Romania has taken important steps to strengthen these bodies to promote more integrated regional planning and investment. A key milestone in their development was becoming Managing Authorities for EU Regional Programmes in 2021 (OECD, 2023[31]). The North-West RDA was also declared an intermediary body under the National Health Programme (programming period 2021-2027).
The Nord-Vest Regional Development Plan 2021-2027 (Planul de Dezvoltare Regională Nord-Vest 2021-2027), developed by the North-West RDA, serves as the main document for coordinating development and investment (Box 1.7). The Nord-Vest Regional Development Plan provides a comprehensive strategy for the region, aligned with the European fund programming period. It includes an overview of the strategic planning process, a detailed socio‑economic profile, a SWOT (strengths, weaknesses, threats and opportunities) analysis, a regional development strategy, financing requirements, indicators of achievement and an overview of the implementation and monitoring systems (Box 1.7).
Nord-Vest Regional Development Plan 2021-2027
The Nord-Vest RDP serves as the key strategic planning document for the Nord-Vest region of Romania. It seeks to align national and EU development policies with regional needs, considering both external (European) and internal (national/local) funds to support investment. Central to the strategy is the creation of an attractive environment and improvement of quality of life. The plan outlines 5 specific objectives (competitive economy based on innovation and digitalisation; developing human and social capital; sustainable, authentic and attractive living environment; responsible use of the natural environment; improving physical and digital connectivity), as well as 21 action areas and a series of indicative actions. The North-West RDA is currently in the process of developing the strategy for the upcoming planning period.
Smart Specialisation Strategy 2021-2027
The Smart Specialisation Strategy (RIS3 NV) 2021-2027 identifies specific sectors with the potential to stimulate innovation and improve productivity. Priorities include innovation for health and wellness (such as agri-food, cosmetics, food supplements and healthcare), emerging sectors (new materials, advanced production of technologies) and the digital transformation (information and communication technology). One key objective is to foster synergies between medical and wellness tourism, by leveraging the region’s mineral springs and thermal baths, focusing on retirees and elderly populations seeking curative treatments or relaxation. Nord-Vest is also part of the TALENT4S3 programme run by Interreg Europe.
Tourism Strategy 2021-2027
The Tourism Strategy 2021-2027 aims increase the number of domestic and foreign tourists and increase overnight stays. If focuses on the development of cultural, creative and recreational tourism across both rural and urban areas to boost employment. The strategy is funded through national, regional and EU sources. (North-West RDA, 2021[32]).
Sustainable Urban Mobility and Smart Cities 2021-2027
The Sustainable Urban Mobility and Smart Cities 2021–2027 strategy aims to transform the Nord-Vest Development Region into a smart, sustainable, and interconnected territory by 2030. This transformation is guided by a comprehensive framework that integrates digital innovation, sustainable transport, and citizen-centric services to enhance regional accessibility, efficiency, and quality of life.
Source: North-West RDA (2024), Regional Development Strategy, https://www.nord-vest.ro/en/despre-noi/
Although the Regional Development Plan provides a comprehensive overview to guide development in Nord-Vest, it could be further strengthened in the future. While the strategy provides a comprehensive analysis of the socio-economic situation of the region, drawing on demographic trends dating back to 1930s, an assessment of future population projections is lacking. Furthermore, the strategy’s structure is tightly bound to specific objectives of the EU Cohesion Policy, which potentially limits its use for broader as an integrated tool for coordinating other (non-EU) investments in the region.
Alongside the Regional Development Plan, the RDA has various other complementary strategies and plans that aim to support development. These include the Smart Specialisation Strategy, Tourism Strategy and the Sustainable Urban Mobility and Smart Cities strategy (Box 4.7).
County and local government responses to demographic change are focused on promoting local economic development to increase attractiveness
Although county and local governments have limited policy responsibilities related to demographic change, they still have an important need to respond to demographic change through local services and investments. As described in Chapter 2, county and local government responsibilities are focused on preparing local development strategies, providing services of local interest (e.g., local roads, water, waste, etc.) and delivering investments. As such, their ability to respond to demographic change is primarily by facilitating local development through strategies and investment, including through spatial planning instruments (see Chapter 3).
Each county in the Nord-Vest region has its own territorial development plan (PATJ) to guide development. The PATJ includes a territorial development strategy (Part 3) that helps to identify priorities for local economic development. PATJ are developed based on analysis of a range of socio-economic indicators. Of the six PATJ in Nord-Vest, all currently include an analysis of historical demographic trends but do not mention demographic projections (Table 1.4). They all have an explicit focus on attractiveness and tourism; however, other priorities related to demographic change such as youth, aging and family policy, are not consistently covered. Actions included in strategies range from infrastructure investments to initiatives for job creation, higher education, entrepreneurship, tourism and promoting social inclusion. The quality of analysis in PATJ documents varies significantly across counties, reflecting varying levels of resources and institutional capacity. For example, Sălaj and Bihor counties engaged consultancy firms to support the development of their strategies, whereas Cluj benefited from the technical assistance from the World Bank. A recurring challenge mentioned in all strategies is the capacity of local public administration posing a risk to effective implementation (see section on capacity).
Core focus areas of county development strategies related to demographic change
Source: Authors’ elaboration based on analysis of Cluj County (2020), Territorial Development Strategy, https://documents1.worldbank.org/curated/en/309501624653827061/pdf/Romania-Draft-County-Territorial-Development-Strategy.pdf ; Bihor County (2020), Integrated Sustainable Development Strategy of the County of Bihor, https://www.cjbihor.ro/informatii-publice/strategia-judetului-bihor/ ; Sălaj County (2022), Integrated Strategy for Sustainable Development of Sălaj 2021-2027, https://www.cjsj.ro/date/pdfuri/Transparenta%20decizionala/Strategia%20de%20dezvoltare%20a%20judetului%20Salaj%202021-2027.pdf ; Satu-Mare County (2021), Development Strategy of Satu-Mare 2021-2030, https://www.cjsm.ro/storage/ddr/strategii/strategia-2021-2030/strategia-judetului-satu-mare-1-final.pdf ; Maramures County (2021), Sustainable Development Strategy of Maramures 2021-2027, https://www.cjmaramures.ro/attachments/strategie/2021-2027/Strategia%20MM%20-%20analiza%20situatiei%20existente_c.pdf ; Bistrița-Năsăud County (2021), Development Strategy of Bistrița-Năsăud 2021-2027, https://www.portalbn.ro/portal/bistrita-nasaud/portal.nsf/AAAF66B8A39DFA56C2258825004BE03E/%24FILE/STRATEGIA%20DE%20DEZVOLTARE%20A%20JUDETULUI%20BISTRITA-NASAUD%20pentru%20%20perioada%202021-%202027.pdf
On top of the PATJ, county governments sometimes also prepare other targeted strategies. Two examples are the Cluj County Development Strategy for Social Services 2023-2030, which has a section on care for the elderly, and the Development and Promotion of Tourism 2021-2027 in Maramures, which aims to promote tourism to support employment, especially for youth in rural areas.
Local governments also prepare a range of strategies and plans for development, but there is considerable variability in their availability and quality. As described in Chapter 3, local governments are mandated to periodically develop General Urban Plans (PUG), in accordance with Law no. 350/2001. Although these plans have to be updated every 10 years under the current legislation, many local governments in Nord-Vest do not have a recently updated PUG. In addition to the PUG, some localities—cities and larger towns—prepare Integrated Urban Development Strategies (SIDU), Sustainable Urban Mobility Plans (SUMP) or Sustainable Development Strategies to support access to EU funds. For example, the city of Năsăud prepared the Integrated Strategy for Urban Development 2021-2027, which includes an analysis of the socio-economic, territorial and socio-demographic profile of the city, with targeted intervention, implementation and monitoring and evaluation system (Năsăud Municipality, 2021[33]), and the city of Cluj-Napoca prepared the Climate Neutrality Action Plan 2030 (Cluj-Napoca Municipality, 2023[34]).
Adapting territorial structures to maintain scale as populations change
As described in Chapter 2, Romania is characterised by centralised system of governance with a relatively high level of fragmentation at both the county and local level. Demographic change will further exacerbate these existing pressures. As some rural communes shrink in population, efficiency of public service provision risks decreasing, creating fiscal pressures and lowering service quality. As urbanisation trends continue and key cities expand, fragmented metropolitan structures risks lowering the quality of urban development. Increasing fiscal pressures from demographic change will also create a need for more efficient service provision. Better adapting administrative and territorial structures to demographic change can have a key role in supporting continued development of Nord-Vest and increase its’ attractiveness.
County governments in Nord-Vest are relatively small and have limited competencies
Romania has a relatively fragmented county government structure reducing scale for public service delivery. As described in Chapter 2, Romania is divided into 41 counties and Bucharest, with eight development regions (including Nord-Vest) having a more limited role as Managing Authorities for EU funds. The six counties in Nord‑Vest have a population between 242 000 (Salaj) and 740 000 residents (Cluj). This is relatively small compared to the regional governments in other comparable OECD countries, such as Poland (average of 1 869 000 inhabitants), France (2 616 000 inhabitants) and Sweden (2 455 000 inhabitants).
County governments also have limited competencies. As described in Chapter 2, their competencies are mainly focused on co‑ordination and management of county hospitals, county roads, county public transport, cultural institutions and certain education institutions. They have limited role in policy design and mainly to implement policies and investments designed by the central government, with strong oversight. Their competencies are more limited than regional governments in comparable OECD countries, such as Poland, France and Spain, where the regional governments have a stronger role in policy design. County governments in Romania have also faced challenges relating to efficient service delivery and maintaining integrity (OECD/UCLG, 2022[35]).
In the context of the fragmented county structure, Romania has had a long-standing debate on regionalisation, and broader administrative-territorial reorganisation. Current proposals aim to replace or augment the existing 41 counties and Bucharest with larger, more functional regions, as well as the merger of localities (Digi24, 2023[36]; Dinca and Chiper, 2023[37]). Discussions tend to focus on a proposal for the creation of eight or twelve new administrative regions, which could coexist with county governments. Debates over regionalisation are complex, with potential benefits arising from administrative efficiency through enhanced scale, supporting decentralisation to allow for better targeting of local needs and aligning with goals for EU integration. However, regionalisation remains a complex topic given a range of historical reasons (Benedek and Bajtalan, 2015[38]). Despite repeated proposals over recent years, no political consensus has been achieved (Digi24, 2023[36]; adevarul.ro, 2023[39]). Currently, Regional Development Councils play an important role for co-ordination at the regional level, notably facilitating dialogue between county presidents and municipalities.
Nord-Vest is characterised by a large number of small and mid-sized localities
At the local level, the territorial structure of Nord‑Vest is fragmented. Nearly half of localities in Nord-Vest have a population below 5 000 inhabitants, with 26% of localities having a population below 1 999 and 54% between 2 000 to 4 999 (Figure 1.20). Only 3% of localities in Nord‑Vest have more than 20 000 residents, well below the OECD average of 36%.
Percentage of localities (municipalities, towns and communes) in Nord-Vest and Romania by population class size
Note: OECD represents the average of available data from OECD member countries
Source: OECD (2024) Subnational Governments in OECD Countries: Key Data; TEMPO Online database (2024)
Over the last 10 years, many localities have been shrinking in population and the number of very small localities has increased. Between 2011 and 2021, 75% localities decreased in population, with an average decrease of 6.8%. By 2021, an additional 13 localities had fewer than 2 000 residents, increasing the proportion of small localities from 23% to 26%. The share of localities with a population above 20 000 has remained stable, although some localities grew while others shrunk. For instance, the population of Florești grew from 15 000 to 44 301 inhabitants, while the population of Salonta fell below 20 000 inhabitants. Having many small municipalities risks increasing the cost-of-service provision in Nord‑Vest (Box 4.8).
In Nord-Vest, per capita expenditure on ‘general public services’ higher in smaller communes than in larger communes. The classification of the functions of government (COFOG) defines general public services as expenditure in areas such as executive and legislative functions, financial and fiscal affairs, and general services. These are functions that are not included in other sectorial categories (e.g., education, economic affairs, housing and community amenities, etc.). Analysis of COFOG data from localities in Nord-Vest indicates that localities with fewer than 1 500 inhabitants spend EUR 237 per capita on general public services, which accounts for almost 30% of their total budget (Figure 1.21). By comparison, communes with populations between 1 500 and 4 999 spent an average of EUR 138 per capita, representing 26% of their overall budget.
Staff expenditure also tends to be also higher in smaller localities. On average, localities with populations between 1 500 and 4 999 allocate 25% of their budgets to personnel costs (average of EUR 126 per inhabitant), compared to 22% in localities above 5 000 inhabitants (EUR 103 per inhabitant). This may indicate that these communes face higher administrative costs. While smaller local governments receive, on average, higher per capita transfers to balance their local budgets—localities between 1 500 and 4999 receive an average of EUR 227 per capita, compared to EUR 155 per capita for those above 5 000 inhabitants.
Note: Each point represents a locality (city, town and communes). PANEL A: General public services include expenditure on items such as “executive and legislative organs, financial and fiscal affairs, general services; basic research; R&D related to general public services. PANEL C: Transfers to balance local budgets include: 1) Sums distributed from the VAT to finance decentralization expenses at the level of communes, towns, municipalities, Bucharest municipality and its sectors, 2) Sums distributed from the VAT to balance local budgets, 3) Own-source revenues - distributed quotas from income taxes to balance local budgets.
Source: OECD (2024), Disaggregated regional and municipal government finance database
Despite population changes, the classification of localities has remained stable
Romania has a unique legal framework for classification localities into cities (municipii), towns (orașe) and communes (comune). The Romanian Constitution allows the classification of localities. Law 351/2001 (National Spatial Planning Plan - Section IV - Network of Localities), provides a process for both the creation of new communes and for the promotion of communes to towns and of towns to cities based on defined criteria (Box 1.9). However, the Law does not provide a process for re-classifying localities to a lower rank where they no longer meet the criteria. Indeed, there is only one example of a town (Băneasa in Constanța County) and no examples of cities being downgraded in Romania, even where the population or other classification indicators have fallen below the threshold.
The original system for classifying localities into cities, towns and communes dates from 1968 (Law no. 2/1968), when Ceaușescu reinstated the county system following an interwar administrative structure (Poiana, 2020[40]). Today, the system for the classification of localities is defined in Law no. 351/2001, which outlines a national network of localities composed of both urban and rural localities. These are ranked according to a defined hierarchy:
rank 0 - capital of Romania, municipality of European importance
rank I - municipalities of national importance, with potential influence at European level
rank II - municipalities of inter-county, county or balancing importance in the network of localities
rank III – towns
rank IV - villages that are the administrative seat of a commune
rank V - component villages of communes and villages belonging to municipalities and cities.
Law no. 351/2001 (amended by Law no. 100/2007) outlines that a locality may be considered to become a city or town by law following a proposal from a local council and after consultation of the local population through a referendum. Localities must meet minimum indicators to become a city or town Table 1.5).
Minimum indicators to promote a locality to a city or town as defined in Law no. 351/2001 and Law no. 100/2007
Law no. 351/2001 also provides a process and criteria for the establishment of a rural commune. In particular, it outlines the requirements for (1) Minimum population of 1,500 inhabitants, 25% of population employed in non-agricultural activities, 45% of houses built after 1960 (2) Component villages of the new commune to be at more than 5 km of the current commune centre, and, (3) Presence of essential institutions (school, town hall, police station, clinic, pharmacy). Law 351/2001 does not provide any criteria for downgrading localities.
Source: Law no. 351/2001 (National Spatial Planning Plan - Section IV - Network of Localities), https://legislatie.just.ro/Public/DetaliiDocumentAfis/29780
Despite historical changes in population, the classification of localities in Nord‑Vest – and across Romania more broadly – has remained static. Today, nearly half of the region’s municipalities and towns no longer meet the size criteria defined in Law 215/2001 (art. 29). Indeed, only 7 of 15 cities in Nord-Vest have a population larger than 40 000 and only 13 of 28 towns have a population above 10 000. The smallest town of Nucet has a population of 2 049 inhabitants, well below the threshold of 10 000 inhabitants (Table 1.6).
Categorisation of localities by population and administrative status
Note: Population category was based on Law no. 351/2001 on the approval of the National Spatial Planning Plan, which sets the minimum population thresholds: 1 500 for communes, 10 000 for towns and over 40 000 for cities.
Source: Source: OECD (2024) Disaggregated regional and municipal government finance data; Law no. 351/2001; Population based on 2021 Census
Many communes in Nord‑Vest also no longer align with the classification in Law 215/2001. Six communes have populations above 10 000 inhabitants, including the ‘rural’ commune of Florești (in the metropolitan area of Cluj-Napoca), which has a population over 40 000 inhabitants. Sixty-nine communes fall below the minimum threshold of 1 500 inhabitants.
The classification of localities has a direct impact on the staffing and financing of local governments. Staffing limits are defined by law based on a locality’s classification and its number of inhabitants. For example, according to Emergency Ordinance 63/2010, a commune with between 10 000 and 20 000 inhabitants can hire a maximum of 60 staff, while a town or city with the same number of inhabitants can hire 130 staff or 349 staff, respectively (Romanian Government, 2010[41]). The classification of localities is also sometimes used to allocate funding, which risks de-linking funding from population limits. This is the case, for example, with the national investment programme Anghel Saligny, which provides a pre-allocated minimum funding level for eligible projects based on the classification of a locality (MDPWA, 2024[42]).
Unions of localities have not occurred recently, but there have been de‑amalgamations
Even with a legal framework in place to support the union (merger) of localities, unions have not recently taken place. Administrative Code 57/2019 on Local Public Administration provides a framework for unification that begins with a proposal from local authorities, followed by public consultation, a local referendum (in corresponding jurisdictions) and approval from local councils, regional authorities and the MDPWA, before the unification is formalised through a government decision (Hintea, Moldovan and Țiclău, 2021[43]). This is a complex process that requires strong local support and political support. Attempts at unification remain extremely rare, underscoring the procedural and political obstacles (Congress of Local and Regional Authorities, 2023[44]). Multiple attempts at unification of localities in Romania in over 30 years have failed. In 2015 and 2016, Oradea sought to form a union with the neighboring commune Sânmartin; however, this union was unsuccessful after three local referendums due to low voter turnout. In Buzău in 2022, a similar process failed even with having support from both localities in referendums. These examples highlight the complexities of administrative-territorial reorganisation in Romania, which make ongoing discussions to simplify processes for unions of localities timely (Romanian Parlament, 2024[45]).
By contrast, Romania has witnessed several de-amalgamations over the last 30 years that have increased fragmentation. These de-amalgamations came partly in response to forced mergers during the process of ‘systematisation’ under Ceaușescu (Stănuș, 2021[46]). De-amalgamations follow the process defined in Law no. 351/2001 for the creation of new communes Box 4.9. Between 1990 and 2009, around 174 additional communes were created across Romania, increasing their number from 2 688 to 2 862 (Stănuș, 2021[46]). Since 2009, there have been no further changes to the territorial structure. The number of cities and towns also increased from 314 to 319. The Nord-Vest region saw the creation of several communes, especially in Bistrița-Năsăud (e.g., Dumitrița, Negrilești, Poiana Ilvei, Runcu Salvei, Ciceu-Mihăiești), but also in Maramures (e.g., Coaș).
Territorial reforms are a sensitive topic in Romania. There are various cultural, political and ethnic considerations (Stănuș, 2021[46]). For example, in localities where minorities constitute at least 20% of the population they are granted specific rights in the Constitution and in Administrative Code 57/2019 on Local Public Administration, including use of their language in public administration. In some cases, territorial reforms could mean minority populations no longer meet the legal threshold, potentially reducing their rights.
Asymmetric decentralisation has not been implemented in practice
Despite a framework law that supports asymmetric decentralisation, it has not been used in practice in Romania. Law no. 195/2006 (Framework Law for Decentralisation) introduces the concept of asymmetric decentralisation to support the transfer of responsibilities to local governments. The Law outlined a methodology for assessing the capacity of local governments and provides for the transfer of competencies. Despite the existence of this law, the reform has not been applied in practice. Examples of decentralisation (or re-centralisation, as with teacher salaries) have been implemented uniformly (Neamtu, 2016[47]). The methodology for assessing administrative capacity was also not rigorously applied, leading most localities to qualify as having sufficient administrative capacity (Neamtu, 2016[47]). There is also local resistance with smaller communes who fear that they would not benefit (Neamtu, 2016[47]).
Uniquely, the classification system for localities may be amenable to further support asymmetric decentralisation. As described earlier, the Romanian Constitution enables the a classification of localities into towns (urban) and communes (rural), with some towns being declared cities. This is reinforced by Administrative Code 57/2019 on Local Public Administration. This classification system, (with an updated and stricter classification of localities) may provide a complimentary framework for supporting the transfer of powers to local governments. For example, the classification could be used to delegate higher responsibilities to higher ranked localities (e.g., cities or towns). The Nord‑Vest has several cities with higher administrative capacity that could be used as a pilot for this.
Fostering collaboration between localities to increase scale
In the absence of territorial reforms, inter-municipal cooperation will become increasingly important to ensure economies of scale of localities in Nord-Vest facing demographic change. Inter-municipal cooperation can enable localities to collaborate on investments and provide services at a functional scale, while preserving local autonomy (OECD, 2019[28]). Amongst other areas, effective inter-municipal cooperation requires a clear legal framework, dedicated funding sources, sufficient administrative capacity, a strategic vision and a culture of trust and collaboration (Kurian, Swianiewicz and Teles, 2024[48]). Inter-municipal cooperation can be relevant for urban and rural localities.
Inter-municipal cooperation frameworks have evolved, but remain complex
Romania has a legal framework for inter-municipal cooperation based on a voluntary agreement between administrative-territorial units2. The current legal framework provides for three main types of inter-municipal cooperation: inter-community development associations (asociație de dezvoltare intercomunitară - IDAs), metropolitan areas and administrative consortia (Box 1.10).
The legal foundations for inter-municipal cooperation in Romania are provided in various laws and regulations. These primarily include Administrative Code No. 57/2019 on local public administration, Law no. 273/2006 on local public finances, Law no. 286/2006 on the amendment of the law on local public administration, Government Emergency Ordinance no. 57/2019 on the Administrative Code, Law no. 246/2022 on metropolitan areas and Law no. 387/2023 on amendments to the Administrative Code. Additional laws, regulations and sector‑specific legislation complement this legal framework, including Law no. 51/2006 on establishing, managing or jointly operating public utilities and Law 241/2006 on water supply and sewage services. The laws describe three main types of inter-municipal cooperation: inter-community development associations, metropolitan areas and administrative consortia.
Inter-community development associations
IDAs are cooperation structures with legal personality under private law and of public utility. IDAs were introduced into legislation with Law no. 286/2006, which amended the framework law on local public administration (Administrative Code No. 57/2019). IDAs can be voluntarily established by two or more administrative‑territorial units for the joint implementation of development projects of local or regional interest, or for the joint provision of public services. They can be financed through contributions from the local budgets of administrative units, from project-based sources, loans or public private partnerships. IDAs are required to have a joint governing body composed of representatives from each participating county or local government.
Several forms of IDAs exist. These include single-purpose entities, multi-purpose entities, programme-based partnerships and project-based partnerships. Examples of single-purpose entitles include agencies for public transport provision, water and wastewater management, waste management, infrastructure management or tourism. Multi-purpose entities include metropolitan areas, local development associations and sustainable development associations. Programme-based partnerships include local action groups (LAGs) under the EU’s LEADER programme, fisheries LAGs and LAGs for urban development. Project-based partnerships related to implementation of a specific investment. IDAs can also subsequently delegate service provision to private providers.
Metropolitan areas
Metropolitan areas are a specific form of IDA. They are defined in the Administrative Code (in particular, Law no. 264/2011 and Law no. 246/2022) as being an IDA constituted as a partnership basis between the capital of Romania, cities of first rank or county-capital cities, and territorial‑administrative units in the immediate area. Metropolitan areas have a legal personality allowing them to enter contracts in their own name. Component localities can delegate or transfer competencies to manage services or run activities dedicated to members of the local communities in the metropolitan area. Metropolitan areas must respect the mandate granted by component localities. Metropolitan areas rely on receiving funding from membership fees and contributions from the local budgets and attraction of project funding, meaning their financial sustainability depends on local political cooperation and their ability to attract external funding.
Administrative consortia
Administrative consortia are voluntary forms of cooperation and association of two or more neighbouring administrative territorial-unit, without a legal personality. Law no. 375/2022 introduced administrative consortia as a simplified association mechanism, in line with certain obligations under the National Recovery and Resilience Plan. The creation of administrative consortia seeks to improve the efficiency of public services, help implement public investment and make better use of skilled human resources. They aim to enable more developed administrative‑territorial units to support those with reduced administrative capacity by sharing resources, as well as facilitating knowledge sharing. Administrative consortia were conceived as a more flexible mechanism, which can be approved by local councils.
Sources: OECD questionnaire (2024); World Bank (2018), Romania Catching-up Regions: Inter—jurisdictional cooperation models https://documents1.worldbank.org/curated/en/193121580281956431/pdf/Romania-Catching-Up-Regions-Interjurisdictional-Cooperation-Models.pdf ; World Bank (201X) Romania Catching-up Regions https://documents1.worldbank.org/curated/en/525151580297667817/pdf/Romania-Catching-Up-Regions-Final-Report.pdf; Pascaru (2017), Inter-municipal Cooperation: World Realities and Romanian Strategies https://www.jppc.ro/index.php/jppc/article/view/196/174; Apostolache, Miheala Adina (2023[49]), The cooperation/association of administrative‑territorial units – A possible answer to the problem of administrative fragmentation and reduced administrative capacity.
Since the legal framework was established in 2001, several IDAs have been established in Nord-Vest. The most recent dataset available (from 2015) indicated that there were 391 IDAs in Romania and 75 in Nord‑Vest (MRDPA, 2016[50]). IDAs in Nord-Vest had a wide range of forms, including metropolitan areas (e.g., Cluj Metropolitan Area), water supply and sewerage service agencies (e.g., IDA for Water Supply and Sewerage Services in Bistrița-Năsăud), waste disposal agencies (e.g., IDA for the Management of Household Waste in Maramures), agencies for sustainable development (e.g., Bihor County Sustainable Development Agency), local development agencies (e.g., Microregion Someș-Codru) and project specific consortia (e.g., Consortium for management of the Pădurea Craiului Development Park).
Although the use of IDAs appears to be relatively common, there remain challenges. Participation of localities in IDAs can be limited by the lack of a culture of association (Apostolache, 2023[49]). A fragmented legal framework, which includes multiple amendments to previous laws and a conflicting public and private legal purpose (see Box 4.10), can increase the complexity (Apostolache, 2023[49]). IDAs sometimes also have unclear or overlapping responsibilities with county or local governments, as is the case with spatial planning in metropolitan areas (World Bank, 2019[51]). Participation of localities can also be constrained by insufficient administrative capacity (e.g., for project development and management) and by limited autonomy over resources (low own-source resources and reliance on transfers that are often earmarked) (Stănuș, 2011[52]). There are also broader concerns that current financial incentives encourage continued fragmentation by reducing support for voluntary amalgamations (Alexe, 2023[53]). Unanimous decision-making process and lack of ability to levy taxes may further reduce the effectiveness of IDAs.
There have been continued efforts to encourage further use of inter‑municipal cooperation in Romania. The Romanian Strategy for Strengthening Public Administration, as part of Romania 2014-2020, highlighted the need to encourage IDAs to support more efficient public services by developing a system to encourage localities to collaborate and established a national programme to support IDAs (MDPWA, 2014[54]). The central government has also implemented programmes to foster IDAs and increase administrative capacity. The central government has also undertaken reforms, including to clarify legislative framework for metropolitan areas (Law no. 246/2022) and to establish administrative consortia as a simpler form of association (Law no. 35/2022). Despite reforms, weaknesses still exist in the IDA model, including relating to the unanimous decision-making process and funding, which does not allow for direct collection of revenues (Alexe, 2023[53]; Apostolache, 2023[49]; Murphy and Ghencea, 2023[55]).
While the introduction of administrative consortia as a simplified framework for inter-municipal cooperation has potential to enhance collaboration, there remain challenges with its implementation. In particular, the use of administrative consortia is potentially limited by regulatory concerns relating the impact on local autonomy and employee relationships, among other areas (Alexe, 2023[53]). As a result, initial implementation appears to be limited, even though the central government has allocated funding and neighbouring communities want to associate (Apostolache, 2023[49]).
The use of the EU’s Integrated Territorial Investment (ITI) mechanism remains limited in Romania. ITIs are a EU funding instrument that support integrated development strategies in specific territories or functional areas, which support coordinated use of resources from multiple EU funds and operational programmes to support cross-sectorial investment across administrative boundaries. As of 2025, there has only been one experience with an ITI in Romania in the Danube Delta in the Sud-Est development region for which a total of €1.3 billion was allocated (Box 1.11). The ITI faced a number of challenges with its implementation. Romania is not alone in facing challenges with the implementation of ITIs, which may arise due to their complex structure, administrative burden and reluctance of states to delegate authority to a local level (European Parliament, 2018[56]).
The first experience of an Integrated Territorial Investment (ITI) in Romania was the Integrated Strategy for the Development of the Danube Delta 2016-2030 (ISDDD). This was implemented during the 2014-2021 programming period with a total value of EUR 1.3 billion. The ITI provided financial and strategic support for a range of projects to support integrated development of Danube Delta region, which is one of Europe’s most biodiverse regions. A significant share of the funding was for the a bridge crossing the Danube in the Braila-Galati area.
The final report on the implementation of the Danube Delta ITI indicated that by 2022 only 44% of the priority projects were fully or nearly fully implemented, 20% were partially or minimally executed, and 36% were not implemented. Factors impeding successful implementation included eligibility constraints, misalignment of projects, delays in project preparation, financial limitations and challenges in identifying appropriate funding sources.
In the latest programming period, Romania has also introduced several new ITIs, among which the RON 12 million ITI Motii Tara de Piatra, which includes parts of Nord-Vest. While implementation is ongoing, initial uptake has been slower than expected.
Source: European Commission (2022[57]), Integrated Territorial Instrument of the Danube Delta - an assessment of its implementation, performance orientation and governance during 2026-2021
The Community-Led Local Development (CLLD), implemented through the LEADER programme, has been a significant instrument for fostering rural development in Romania since its introduction in 2007. This approach empowers local actors to design and implement development strategies tailored to their specific needs, promoting a bottom-up methodology that emphasises community involvement and multisectoral partnerships. The programme operates under the National Rural Development Program in Romania. In the previous programming period, Romania established 239 Local Action Groups (LAGs), covering 88.9% of Romania’s territory (Opria, Roșu and Lațu, 2021[58]). Nord-Vest has been particularly active in implementing this programme, with overall 34 LAGs in the region as of 2019. These LAGs are tasked have with designing and executing local development strategies within the framework of the LEADER axis of the PNDR 2014-2020 program. Bringing together local authorities, the private sector, and civil society, they foster collaborative partnerships aimed at addressing local needs and promoting integrated local development. In rural areas, representing around 95% of the rural population, the involvement of LAGs has encouraged community engagement in developing projects of local significance in 10 rural communities. Despite its many benefits, there are also challenges. In the Nord-Vest, a key obstacle is the lack of support provided to existing LAGs, particularly in terms of resources, which hampers their operational capacity and effectiveness (North-West RDA, 2021[24]).
Metropolitan governance frameworks are being strengthened
Effective governance of metropolitan areas in Nord-Vest enhances the development of cities, which can help to retain young people in the region. Urban areas, especially large and productive urban areas, act as economic engines that drive increases in well-being, attract youth and provide economic spill-overs across surrounding areas (OECD/European Commission, 2020[59]). Governance structures that operate across a functional urban area have an important role in supporting effective urban development (Ahrend, Gamper and Schumann, 2014[60]).
Metropolitan areas are a form of IDA that seek to support integrated development within a metropolitan area surrounding key cities in Romania. Functions of metropolitan areas primarily relate to strategic planning (e.g., preparation integrated urban development strategies and plans), implementing projects to increase administrative capacity, attracting EU and national funding, participating in transnational cooperation projects and provision of technical assistance to local authorities (Hintea, Moldovan and Țiclău, 2021[43]; Danielewicz, 2021[61]; World Bank, 2019[51]).
In Nord-Vest, a number of metropolitan areas have been established with varying functions. There are currently three main metropolitan areas in Nord-Vest: Cluj-Napoca, Oradea and Baia Mare Area (Box 1.12). There is also a metropolitan area with more limited functions in Zalău and a former metropolitan area in Satu Mare. Although the metropolitan areas in Nord-Vest have a role to promote integrated urban development, their functions remain limited and are highly dependent on EU project funding.
The Nord-Vest region currently has five legally constituted metropolitan areas, which vary in their size and activities.
Cluj-Napoca Metropolitan Area
The Cluj-Napoca Metropolitan Area, established in 2008, consists of the city of Cluj-Napoca and 21 surrounding communes. The metropolitan area aims to support growth, prosperity and wellbeing of its citizens through the development and implementation of common interest projects and the joint provision of public services. The metropolitan area has prepared various strategies for the metropolitan area, including the Sustainable Urban Mobility Plan Cluj-Napoca 2021-2030. It has conducted various investment projects in the metropolitan area, predominantly with EU funding. Examples include the design and operation of Făget, a large peri-urban forest and Let’s Go Circular. It also participates in international networks, such as Eurocities, and has developed a metropolitan GIS database to facilitate policymaking.
Oradea Metropolitan Area
The Oradea Metropolitain Area, established in 2005, consists of the city of Oradea and 11 surrounding communes. It aims to foster and enhance the area’s economic and social vitality, continuously improving quality of life, promoting territorial cohesion, aligning with European standards and attracting investment. The Sustainable Urban Mobility Plan at the level of Oradea Municipality and Oradea Metropolitan Zone 2021-2027 (SUMP) and the Integrated Urban Development Strategy of Oradea Municipality and Oradea Metropolitan Zone 2021-2027 were implemented to support the achievement of the Metropolitan Area’s strategic objectives. Since its creation the Oradea Metropolitan Zone has implemented 33 projects and 3 are currently under implementation in several areas such as transportation, infrastructure and renewable energy. It has also engaged in wide cross-border cooperation with regions in Hungary such as the cross-border road construction Cheresig-Korosnagyharsany.
Baia Mare Metropolitan Area
The Baia Mare Metropolitain Area, established in 2006, consists of the city of Baia Mare, three towns (Baia Sprie, Cavnic and Seini) and 13 communes. Over the years, it has crafted strategic plans for several communes within the metropolitan territory. The association has also implemented numerous initiatives, including a project focused on enhancing strategic planning and streamlining bureaucracy in Baia Mare Municipality and the broader metropolitan area. Notable examples include its participation in the STATUS project, part of the Southeast Europe Transnational Cooperation Program, which supports integrated territorial strategies for metropolitan areas, as well as the Inter Urban project—a cross-border database developed in partnership with Hungary to monitor indicators for sustainable development.
Other metropolitan areas in Nord-Vest
The Zalau Metropolitain Area was developed in 2015 and is composed of the city of Zalau, three towns and 12 communes. Information on the metropolitan area’s activities is limited.
The Satu Mare Metropolitain Area, established in 2013 and consists of 2 cities (Satu Mare and Carei), 3 towns and 26 communes. Information on the metropolitan area’s activities is limited.
Source: Cluj Metropolitan Area (n.d.), https://www.clujmet.ro/about-cluj-metropolitan-area-association/ ; Oradea Metropolitan Area (n.d.), https://zmo.ro/ ; Baia Mare Metropolitan Area (n.d.), https://www.zmbm.ro/en/ ; Zalau Metropolitan Area (n.d.), https://zmzalau.ro/municipiul-zalau/ ; North-West RDA (2021), Nord-Vest Regional Development Plan 2021-2027
Romania progressively strengthened the legal framework for metropolitan areas. Law no. 215/2001 on Local Public Administration (now Administrative Code No. 57/2019) and Law no. 351/2001 on the approval of the National Spatial Planning Plan provided first definitions of Metropolitan Areas. Following their initial introduction, metropolitan areas faced challenges relating to a lack of detailed provisions on governance, unclear relationships with decentralised institutions, imprecise definition of metropolitan areas, unstable funding mechanisms and a lack of specific competencies, among other areas (Hintea, Moldovan and Țiclău, 2021[43]; World Bank, 2019[51]). The success of metropolitan areas is highly dependent on cooperative relationships between the core city and surrounding communes. Following the establishment of the Cluj-Napoca Metropolitan Area, for example, a first integrated development plan focused overly on interventions in the urban core of Cluj-Napoca, leading to mistrust and friction with surrounding communes (Sabina, 2019[62]). In this context, Integrated Urban Development Strategies (SIDUs) can help facilitate inter-municipal co-operation in metropolitan areas (see Chapter 3).
Recent legislative updates have sought to provide clarity provisions on the establishment, governance and competencies of metropolitan areas. Law no. 246/2022 consolidated and clarified the legal basis for establishing, organising and managing metropolitan areas. It provided the ability for the 40 county seats (county capitals) to create metropolitan areas up to two rings beyond the central municipality (Article 5, Law 246/2022). For Bucharest, the metropolitain area should cover at least the administrative territory of Ilfov County. The law enhanced governance by specifying frameworks for collaboration, decision-making and joint management of projects and services. The law also provides detailed rules for defining metropolitan boundaries. However, even with these changes metropolitan areas still face challenges relating to complex regulations, limited ability for metropolitan areas to coordinate efforts of local governments and lack of stable funding (Drăghia, 2023[63]).
Reinforcing regional and local public capacity
Insufficient administrative capacity across all levels of government in Romania risks undermining the ability to effectively anticipate, plan for, and respond to demographic change. At the national level, the public administration has been characterised by: i) a lack of skilled staff; ii) a low degree of digitalisation; iii) excessively bureaucratic processes; and, iv) a pressing need to attract, develop and retain qualified people (EC, 2024[64]). This low absorption rate of the 2021-2027 MFF has been identified to stem primarily from weak administrative capacity (Fiscal Council of Romania, 2024[65]). Indeed, the national absorption rate was just 2.1% at the end of 2024, below the unweighted EU average of 4.2%3. Romania’s Public Function Strategy for 2022-2027 has acknowledged these challenges and provided a framework to tackle them, including through several RRP measures (e.g., developing digital and sustainable development skills, leadership and talent management) (EC, 2024[64]).
Investment capacity in Nord-Vest appears to be above EU and Romania averages (Figure 1.22). While implementation of latest regional programme is in an early stage, as of late 2024, Nord-Vest had spent 3.0% of its allocated funds, well above 1.8% for EU and 1.7% for Romania. This is generally in line with EU averages seen during the equivalent stage of the 2014–2020 programming period (3.1%), again above that of Romania (0.9%).
Absorption rate of EU funds, funds spent as a percentage of planned spending
Note: The figures are based on ERDF data; the absorption rate is calculated as the ratio of funds spent to funds planned. Comparison between programming periods starts from first year when funding was decided in each period (2014 and 2022, respectively), as disbursal for the 2021–2027 period was initially disrupted by the pandemic.
Source: Cohesion Open Data Portal (2024), Cohesion Open Data Portal (Accessed Jan 2025)
While Nord‑Vest performs above other Romanian regions, staffing and skill levels within the region remain a challenge. The North-West RDA has recognised the skills gap and included objectives related to the strengthening administrative capacity in the region in its Regional Development Plan (North-West RDA, 2021[24]). Specific capacity challenges highlighted in the plan include design, planning and policy formulation capacity, and lack of vision and skills dedicated to developing and update development and spatial plans.
Another specific capacity challenge in Romania is that public staff levels are partly determined by limits linked to the classification of the county or locality. Cities and towns have higher public staff limits than communes, even where a commune has a larger population. For instance, Turda and Florești have around the same population of 40,000, but as Turda is classified as a city and Florești as a commune, Turda has more than two times the staff of Florești (Figure 1.23). Furthermore, posts are not always filled (North-West RDA, 2021[24]).
Source: World Bank (2020), Territorial Development Strategy of Cluj County: Action Plan, https://documents.banquemondiale.org/fr/publication/documents-reports/documentdetail/464271624653989921/romania-draft-county-territorial-development-strategy
Adapting to a shrinking and ageing population in Nord-Vest will require proactively strengthening subnational finances, adjusting investment planning and improving multi-level governance. Acting before the demographics evolve further can help ensure the Nord-Vest region remains an attractive place for residents, especially youth. Based on the analysis in this chapter, four overarching recommendations have been identified, each supported by several specific recommendations.
Enhance long-term strategic planning to better align investments to future populations
As outlined in this chapter, regional-level strategic planning in Nord-Vest has been progressively strengthened over time as the guiding role of the North-West RDA has increased. However, it remains fragmented and underdeveloped across different levels of government, limiting the ability to provide a coordinated response to demographic changes. To help address these challenges, key policy actions may include:
Update and formally adopt the national territorial development strategy to strategically and coherently respond to long-term trends, especially demographic change. and youth outmigration. In line with the Law on Regional Planning and Urbanism (Law No. 350/2001), the MDPWA is responsible for regularly preparing an SDTRSDTR in order to support balanced, coherent and sustainable development. The MDPWA is current prioritising the update to the SDTR, which could further account for population projections and identify measures to adapt to these trends at a national scale. A particular focus could be placed on rural areas. A sufficient level of detail should be provided in the SDTR to ensure support a place-based approach to development. The European Commission could facilitate the adoption of the national strategy by linking a portion of funding to its adoption.
Ensure that key development strategies and plans across all levels of government explicitly include long-term population projections. The MDPWA may consider further amending the Law on Local Public Administration (Administrative Code No. 57/2019) to require all relevant administrative bodies’ development strategies to include independently prepared long-term demographic projections. Even without a legal requirement, the North-West RDA could benefit from adopting a more forward-looking perspective in its Regional Development Plan by including population projections and articulating a development strategy that prioritises investments based on demographic trends. The North-West RDA may also benefit from ensuring that the selection criteria for EU funded investments includes consideration of a project’s potential impact on managing demographic change and retaining talent.
Continue to enhance strategic planning by the North-West RDA, including for national investment programmes, to limit investment fragmentation and ensure investments are aligned with population changes and regional priorities. The North-West RDA can further the role of its Regional Development Plan as a mechanism to coordinate and prioritise investments within Nord-Vest, while ensuring the inclusion of local stakeholders so that investments respond to local needs. The RDA should continue to use the process of developing the plan to coordinate and prioritise investments within Nord-Vest to ensure that these are complementary and reach common goals, including with nationally administered programmes. This could benefit from having a structured consultation process with national, county and local stakeholders, especially youth (for example see Lublin, Box 1.13).
Conduct a structured consultation process with youth and other stakeholders to support development of the next Regional Development Plan. The North-West RDA should conduct a structured consultation process with national, county and local stakeholders to give inputs into the development of the next Regional Development Plan. A particular focus should be placed on consulting youth in the region. The consultation process could focus on informing the identification and strategic prioritisation of investments, with a focus on adapting to demographic change and helping to retain youth.
Strengthen local-level statistics to better inform regional, county and local strategies to help address demographic change. The central government—through the NIS—should continue to enhance the availability and quality of data available at a locality level, including for long-term population projections, public service quality, housing, health and education outcomes, public sector skills and local government finances. In particular, granular population projections at the locality level are needed to support investment and policy decision-making by the North-West RDA and local authorities. There is also potential for greater use of administrative data by strengthening privacy protections, streamlining internal data sharing and use across government, and continuing to consolidate fragmented data sources through unified digital platforms. The North-West RDA could also benefit from complimenting national data collection by digitalising, harmonising and publishing additional datasets relevant to Nord-Vest, such as on public transport use.
In the run-up to becoming the first Polish city to earn the title of European Youth Capital in 2023, Lublin City Hall established a Task Force for managing and implementing a forward-thinking strategy to attract and retain its youth. The team was formed from individuals working in departments that had both direct and indirect contact with youth. The city's youth policy was designed based on a needs’ assessment developed through research and direct interviews with young residents, ensuring their voices were at the forefront of the development process. It focused on key areas such as education, employment, civic engagement and mental health support. Youth notably expressed a strong desire for more youth associations and community spaces, of which eight were established to address specific needs, including in areas affected by social exclusion.
Lublin hosted nearly 1,000 youth-centric events in 2023, further fostering active participation, showing a deep commitment to the well-being and future of its young citizens. Youth-driven local change is also supported through the “Miejski Aktywator Młodzieży” (City Youth Activator) micro-grant programme which fosters youth engagement in local initiatives, often in collaboration with local NGOs. In 2023 alone, 20 such initiatives were supported, including the Polish-Ukrainian Intergenerational Festival. A Youth City Council was also created to allow secondary school students to represent young people in the municipal structures and see how local public bodies and institutions operate. Young councillors can develop proposals, which are later considered by the “adult” Lublin City Council.
Source: City Of Lublin (2023[22]), City of Youth: Youth Strategy of Lublin, https://lublin.eu/lublin/esm2023/polityka-mlodziezowa-miasta-lublin/; OECD (2024) https://www.oecd.org/content/dam/oecd/en/about/programmes/cfe/rethinking-regional-attractiveness/rethinking-regional-attractiveness-of-lubelskie-poland-en.pdf
Adapt territorial structures as the population changes
As outlined in this chapter, the fragmented territorial structure in Nord-Vest has remained relatively stable, even as historical trends have significantly changed the population of localities. The territorial structure is relatively fragmented. Many localities in the region no longer meet the population criteria specified in the Law on Local Public Administration (Administrative Code No. 57/2019) and the broader use of inter‑municipal co-operation remains limited. To help address the related challenges arising from demographic change, key policy actions may include:
Update the administrative territorial structure to align the categorisation of local authorities with changes in the population. The MDPWA should update the classification of local authorities (cities, towns and communes) to align with existing criteria, such as minimum population thresholds in the Law on Local Public Administration (Administrative Code No. 57/2019) alongside other criteria such as local authorities’ territorial context and functions (for example, as “rural poles” to ensure access to essential services). The RDA should continue to ensure that the categorisation of local authorities is not used as the basis for allocating funding
Streamline the legal framework and promote benefits of mergers to support small local authorities to voluntarily merge where their viability is reduced due to demographic change. The MDPWA, and other relevant central government ministries, would benefit from reviewing the legislative process and streamlining administrative and legislative processes, for example by limiting the number of approvals and referendum thresholds. A review could also consider limiting the ability for local governments to undertake a de‑amalgamation process. To support this, the MDPWA, in collaboration with relevant local government associations, could develop a blueprint model and practical handbook, offering legal and procedural guidance, including analysis of public finances of local authorities and details on potential benefits of merging. The central government could consider providing financial support to cover the cost of a merger to local authorities. Separately, the North-West RDA could consider requiring local authorities to meet a population criterion to be eligible for accessing certain programmes.
Develop guidelines and good practices to facilitate inter-municipal cooperation, potentially focused on localities facing larger impacts from demographic change. The North-West RDA, in collaboration with MDPWA and relevant local government associations, could consider developing blueprint models and practical handbooks, offering legal and procedural guidance on key governance mechanisms, such as inter‑municipal cooperation and municipal mergers. This could include details of the potential benefits of these mechanisms and how to ensure they are effective. The North-West RDA could also consider providing technical support and training to guide local authorities throughout the process and raise awareness of their benefits. The RDA might also consider implementing funding conditionalities to incentivise inter-municipal co-operation, such as through a dedicated fund for administrative consortia.
Earmark EU funding to for investments that are undertaken through inter-municipal co‑operation to promote the use of these mechanisms and support investment at the right scale as populations change. The North-West RDA could consider introducing eligibility criteria that require local authorities to meet a population criterion or to establish inter-municipal co-operation mechanisms across a functional area to be eligible for accessing certain programmes.
Strengthen the national legal framework for inter-municipal co-operation to facilitate more efficient service provision, especially in depopulating areas. The MDPWA, with support of the relevant associations of local authorities, could further develop targeted funding, incentives and training to encourage IDAs and Administrative Consortia, especially in depopulating areas. This could be supported by exploring further updates to the legal framework to help concentrate the key legal provisions for municipal co-operation, such as those found in the Law on Local Public Administration (Administrative Code No. 57/2019), into a single, dedicated legal framework, clarifying roles, types and funding mechanisms and including complementary details in specific regulations within sectoral laws. The MDPWA might also consider introducing a legal mandate in national legislation that requires municipalities with populations under a specific threshold (e.g., 5 000 inhabitants) to engage in cooperative arrangements for the provision of key services (e.g., public transportation). To support these efforts, the MDPWA, together with associations representing local authorities, may consider establishing guidelines and share best practices for inter-municipal co‑operation. The North-West RDA could also consider providing technical support and training to guide local authorities throughout the process and raise awareness of their benefits.
Reinforce metropolitan governance by further strengthening the Law on Metropolitan Areas and clarifying funding arrangements to facilitate more effective development in growing urban areas. To support the metropolitan areas in Nord-Vest, the MDPWA may wish to consider further strengthen the legal framework for metropolitan areas to more clearly clarify responsibilities and distinguishing them clearly from those of local authorities. This could, for example, give a defined role to metropolitan areas for issues such as strategic planning, transport and investment. The MDPWA may also consider arrangements to ensure that metropolitan areas have dedicated funding in the future programming framework and requiring participation of relevant localities. Alternatively, the RDA could consider setting side a pool of funds for metropolitan areas.
Use the inter-governmental transfer system to strengthen the role of metropolitan areas and to foster inter‑municipal co-operation for efficient public service provision as populations change. The Ministry of Finance, in co-operation with the MDPWA, may wish to continue building on recent changes to funding for inter‑municipal co‑operation bodies (e.g., IDAs, administrative consortia) by further facilitating co-operation. As part of this review, the Ministry of Finance may wish to consider opportunities to increase incentives for cooperation, for example by providing PIT allocations directly to inter‑municipal co‑operation bodies, by linking funding amounts to the degree of cooperation or by raising user charges and fees for services provided by these bodies.
Harness the European Commissions’ Integrated Territorial Investment (ITI) instrument to foster a culture of collaboration, especially for metropolitan areas. The North-West RDA, with the support of the European Commission, could consider supporting and guiding stakeholders wishing to use ITI in metropolitan areas, as well as making sure that these are built on lessons learnt and success of existing ITIs, advise the creation of strategies and verify their conformity with EU regulations and principles, as well as make sure there is an embedded component for capacity building within these structures, in time for the adoption of the next EU multi-annual financial framework. Metropolitan areas could start to identify potential projects to make better use of ITIs in future programming periods. The North-West RDA could also undertake capacity‑building on ITIs through workshops and support knowledge sharing, including by creating practical technical, financial and legal guidance. Local authorities in Nord-Vest could also benefit from further supporting Local Action Groups and the Community-Led Local Development instrument. Further use of the ITI instrument in metropolitan areas could help further reinforce and strengthen metropolitan governance and cooperation.
Examine longer-term opportunities to facilitate strategic and cross-sectorial responses at a regional level to respond to demographic change and other economic development needs. The MDPWA may wish to explore opportunities for the continued evolution of the regional level to ensure an effective and efficient response to strategic challenges. This could consider options to reinforce the role of RDAs within the broader multi-level governance framework or alternative governance models, while also considering ensuring a pathway to continue empowering local authorities (see example of Poland, Box 1.14).
History, reforms and outcomes of regionalisation in Poland
Poland has undergone profound transformations over the past five decades. In 1975, the territorial structure was fragmented into 49 small voivodeships (regions), and powiats (counties) were abolished entirely. This was presented as an effort to bring administration closer to citizens and improve service delivery by creating smaller and more accessible voivodeships. The aim of the new structure was also to support the centralised command economy and align regional governance with top-down development plans. However, in practice instead of enhancing local governance, it strengthened central control, weakened regional capacity and autonomy, and led to administrative inefficiencies (Opiłowska, 2019[66]).
As part of the post-1989 transformation in Poland, reforms gradually restored local self-government. A key milestone was the implementation of the Law on Communes in March 1990, which granted communes legal personality and significantly expanded their competences. Local authorities gained ownership of communal property and assumed responsibility for local budgets and all local affairs (e.g., spatial planning, public transport, healthcare, education). This decentralisation process culminated in the 1999 territorial reform, which reintroduced counties and established 16 regions to divide responsibilities more effectively between local, county, regional and central levels. The aim of this reform was to strengthen regional governance and administrative capacity and foster balanced development. In 2000, contracts between regional and central government were implemented, to enhance coordination of development policy and strengthen multilevel governance (Myck and Najsztub, 2019[67]; Opiłowska, 2019[66]).
The territorial reforms in Poland had subsequent impact on regional development, which provided a more decentralised framework, thereby empowering local governments to better address local needs and priorities, fostering more responsive and targeted initiatives across regions (Myck and Najsztub, 2019[67]). Reforms also strengthened the capacity of local authorities, enabling them to manage resources more efficiently. The alignment of Poland's administrative structures with EU cohesion policy requirements improved coordination between national and regional levels, leading to more efficient absorption of EU funds and implementation of regional policy (Zuber, 2023[68]). The reforms also contributed to balanced regional growth, as peripheral municipalities did not experience slower socio-economic development despite concerns about their distance from new administrative centers (Myck and Najsztub, 2019[67]).
To further strengthen local investment, the Polish government has effectively mobilised the ITI instrument. This has sought to promote intermunicipal cooperation by using financial incentives and guidelines. For example, ITI served as a tool for the implementation of SUD in Poland. Overall, 24 metropolitan areas and urban agglomerations have benefited from the support through this instrument. Poland has gradually increased from the minimum 5% of ERDF to allocated to functional urban areas within ITIs to 11% (including also funds from the ESF). ITIs were included in all of the operational programmes, and Local Intermediate Bodies were created for management for the first time. As such ITIs brough EU funding to FUAs, but also increased territorial coordination for EU-funded investments (World Bank, 2019[51]).
Gradually and asymmetrically increase subnational government autonomy to facilitate more tailored local responses to demographic change and attractiveness
As described in this chapter, local governments in Nord-Vest are well placed to understand local demographic challenges and identify opportunities to respond, but their ability to act is limited by low autonomy. Their main pathway to respond to demographic change is through investment supported by national and EU funds. Although has been commitment to decentralisation, progress has stalled. To help address these challenges, key policy avenues may include:
Create a pilot programme for decentralisation that grants additional competencies and fiscal autonomy to high-capacity local authorities to enable them to promote local development that is responsive to local needs and demographic trends. In line with Romania’s 2017 General Strategy for Decentralisation, the MDPWA could consider identifying a selection of local authorities in Nord-Vest who have sufficient capacity (e.g., cities, or cities above 40 000 population) and implement a pilot program to grant additional competencies and revenues (e.g., new tax instruments, different tax rates, block grants, etc.). The MDPWA may then wish to evaluate and refine the programme and consider progressively rolling it out as other local authorities develop capacity. An updated classification of local governments could be used as the basis for granting additional competencies. The EC, potentially through the North-West RDA, could provide dedicated funds for capacity building and monitoring systems to support the pilot.
Support county and local government strategic planning by developing a publicly available dashboard that provide indicators on each government to encourage effective and accountable local development. The North-West RDA could create a database and user-friendly dashboard showing quantitative indicators on all local authorities in the region. This could include information on past, current and planned projects (e.g., budgets, progress and timelines). It could also include key indicators on local public services, health and education outcomes, environment and local attractiveness, among other areas (see for example Estonia, Box 1.15). The North-West RDA could publicly share data in the dashboard and highlight good practices of local authorities that manage to improve indicators. In addition, the central government, through the Ministry of Finance and NIS, should publish a detailed and standardised database of county and local government finance.
Develop local public sector skills to ensure that counties and local governments have the capacity to effectively deliver services and investments in the face of the ageing workforce and youth outmigration. The MDPWA, together with associations of cities, towns and communes, could undertake an assessment of skills gaps (e.g., through a survey) and implement centralised training programmes and support systems to address these gaps. The North-West RDA could develop investment guidelines and provide targeted technical support in areas of capacity constraints, such as strategic planning and public procurement. The North-West RDA may then explore options to further support local capacity gaps, such as establishing a regional expert pool, directly hiring technical specialists who can support local authorities on a rotating or project basis.
Learning from experience and sharing knowledge
Estonia’s My Municipality aims to facilitate efficient public service delivery by systematically monitoring and presenting key indicators of local government service provision in a clear and accessible way for citizens, local governments and policymakers. My Municipality facilitates strategic decision-making by identifying regional disparities and highlighting good practices, enabling targeted improvements in service provision.
My Municipality portal offers detailed, comparable data on local government performance across 18 areas such as education, governance, and housing and communal facilities. It uses a comprehensive evaluation methodology that encompasses over 700 metrics, sourced from a variety of institutions, registers, municipalities, and centrally-conducted satisfaction surveys. The data is updated annually in general but for certain specific criteria, updates occur multiple times a year, with the residents ‘satisfaction survey being revised biennially.
This data-driven approach not only support better decision-making but also fosters greater transparency and encourages active citizen participation in local development. By visualising outcomes and trends over time, it enables municipalities to set targets, monitor results, and learn from others’ approaches, strengthening accountability and continuous improvement in local service delivery.
Source: My municipality portal (2024), Ministry of Regional Affairs and Agriculture, https://minuomavalitsus.ee/en
Strengthen county and local government finances to support an equitable and locally designed response to demographic change
As described in this chapter, the complex inter-governmental fiscal framework of Romania gives county and local governments limited autonomy to respond to local needs and creates a risk that finances do not align with population needs. Subnational governments remain highly reliant on grants and transfers, which make up 83.7% of their revenue. Recent reforms have sought to improve the distribution of PIT for metropolitan areas and inter-municipal co-operation bodies, but further reforms may be needed to adapt to long-term demographic shifts. To help address these challenges, key policy actions may include:
Update the property tax system and increase tax administration capacity to generate additional own‑source revenues for locally designed programmes for families, youth and the elderly. The Ministry of Finance completing its review and simplification of the property tax system could provide an opportunity to help ensure local governments further leverage property taxes to respond to local needs. This might be supported by considering areas such as the band of property taxes, property valuations and incentives for improved compliance. The Ministry of Finance may also consider opportunities to strengthen the capacity of local officials to support the ongoing shift to the recently upgraded property taxation system. County and local governments should undertake campaigns to more actively communicate with local taxpayers about the local programmes supported by property taxes to increase public support.
Review the equalisation system to ensure equitable, efficient and transparent resource allocation in line with local expenditure needs and based on verifiable demographic, socio‑economic and geographic indicators. The Ministry of Finance could consider opportunities to review the PIT and VAT sharing systems, as well as the National Equalisation Fund, to help determine whether the current mechanism will remain fit‑for‑purpose in the context of demographic change. The review might consider options to better link transfers to local expenditure needs through a formula‑based allocation based on verifiable and transparent indicators, including for demographics. The review could also consider simplifying, clarifying and standardising the transfer system, for example by limiting indirect transfers (e.g., share of PIT provided to county councils for redistribution). It may also benefit from considering opportunities to reduce the use of earmarking to give local authorities more ability to target funds to local needs.
Update or otherwise avoid using the classification of local governments (cities, towns, communes) for funding and staffing decisions to better align funding to demographic indicators. The central government should avoid using the classification of local authorities (cities, towns and communes) for funding allocation and staffing limits. Funding and staffing decisions and rules would benefit from being linked to transparent indicators based on the demographic indicators, competencies (where asymmetric decentralisation is adopted), and other relevant factors.
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← 1. This section draws on three sources of public finance data: 1. OECD National Accounts, which is used for the subnational government sector for Romania and for international comparisons; 2. Disaggregated regional and municipal government finance databases, which is used for county and local governments in Nord-Vest and both domestic and international comparisons; and 3. A database provided by the Ministry of Development, Public Works and Administration, which is used for county and local governments in Nord Vest and for domestic comparisons only. Importantly, the three sources do not always agree due to differing data classification and coverage.
← 2. The term ‘administrative-territorial units’ refers to counties and localities (cities, towns and communes).
← 3. Based on the un-weighted average of EU member states of the total spending as of April 2025 (CF, ERDF, ERDF+, Interreg and JTF) against total EU planned spending using data from the Cohesion Open Data Portal.