At the recent Tradeville Quarterly Report event in Bucharest, I was asked about my views on the Romanian capital market. Without hesitation, I expressed my bullish outlook for Romania over the next decade. An online participant challenged me to elaborate, and I touched upon factors like wage parity, population dynamics, consumption trends, and the remarkable talent of Romanian tech entrepreneurs—even mentioning that industry giants like NVIDIA recognize Romania’s tech capabilities. Yet, I felt my response only skimmed the surface. I’d like to delve deeper into why I believe Romania is poised for significant growth.
Disclaimer: I am biased. As a dual citizen of Canada and Romania, with teams operating in both countries and clients worldwide, my perspective is shaped by personal and professional experiences in Romania.
Unveiling Romania’s Tech Talent
My journey in the tech and financial services sectors has taken me across the globe. I’ve collaborated with brilliant minds from India, Hungary, Canada, the UK, Russia, the USA, and Romania. Over the past 25 years, I’ve been immersed in fintech—even before the term was coined—working with stock exchanges, banks, brokerages, and funds. This extensive experience has honed my ability to recognize exceptional tech talent, and Romania stands out.
Romania boasts a robust pool of IT professionals. According to the European Union’s Eurostat, as of 2021, over 200,000 people were employed in the IT&C sector, contributing significantly to the country’s GDP. Romania ranks first in the European Union for the number of certified IT specialists per capita. Furthermore, the country is known for its strong performance in international programming and mathematics competitions. Romanian students consistently achieve top positions in the International Olympiad in Informatics and the International Mathematical Olympiad.
While the world celebrates tech leaders of Indian origin like Sundar Pichai and Satya Nadella, Romanian developers often operate under the radar. But when you look at the success stories of UiPath, Bitdefender, and LiveRail, you start to see a pattern that’s hard to ignore. These companies have not only achieved global recognition but have also laid the groundwork for a thriving tech ecosystem in Romania. They invest, nurture, educate, and actively engage with their ecosystems to assist the next generation of entrepreneurs.
The Linguistic and Cultural Edge
I speak Romanian. I took a language exam for my citizenship. It wasn’t easy. The more I think about it, the more I realize that the language itself was not hard—it was that I didn’t interact with many native speakers over the years. Everyone from a broker to a developer to a market participant to an asset manager to a regulator preferred to talk to me in English. The few who didn’t speak English—like the lady at the bakery, the shop manager, or the occasional bank teller—were the ones who truly taught me the language.
In regions like Transylvania, multilingualism is common. Developers often speak Romanian, Hungarian, English, and sometimes French or German. Approximately 6.5% of the population are ethnic Hungarians, contributing to the region’s linguistic diversity. This versatility enhances their ability to collaborate across borders and adapt to different markets.
Romania’s Unique Position in Eastern Europe
An often-overlooked fact is that Romania was never part of the Soviet Union. While it was a communist country during the Cold War, it maintained a degree of independence from Moscow, especially in its foreign policy. This historical context means that Romania doesn’t have the same level of Russian influence or interests that some of its neighbors do. In the current geopolitical climate, this independence is a significant advantage.
Sometimes, geopolitical risks turn into opportunities. Wars, by their nature, have limits. The current period of conflict will eventually conclude, and when it does, countries like Romania are poised to benefit from increased investment and economic activity. As the region stabilizes, I believe Romania’s growth will outpace that of the rest of Europe due to its readiness to absorb new capital and expand its industries.
Romania’s geographical location positions it as a gateway between Western Europe and Eastern markets. Its access to the Black Sea and proximity to major trade routes enhance its strategic importance. Additionally, Romania’s energy independence is notable. It’s one of the few European countries with significant oil and gas reserves and is a net exporter. With an average annual GDP growth rate of nearly 5%, Romania ranks as one of the fastest-growing European countries.
Reverse Brain Drain
An estimated 3–5 million Romanians live abroad. As wage parity reduces, many expatriates now prefer returning home. When they do, they bring valuable international experience and networks. Reverse brain drain is enriching the local talent pool and fosters innovation.
Low Correlation to Global Markets and Currency Stability
Romania’s economy has a low correlation to global market volatility, offering a hedge against international economic downturns. The BET Index, tracking the top companies on the BVB, has shown resilience during global market fluctuations. Moreover, in the event that the Euro comes under pressure, the Romanian Leu (RON) is likely to hold its ground. Maintaining its own currency gives Romania the flexibility to implement monetary policies suited to its national interests. The National Bank of Romania has effectively managed inflation and exchange rates, keeping inflation at moderate levels relative to global trends.
Sustainable Living and Cultural Values
Romania offers a high quality of life with a lower cost of living compared to Western Europe. Living expenses are approximately 50% lower than in countries like Germany or France. Even professionals often receive weekly care packages from family in nearby villages—soups, chicken, juice, and the beloved zakuska (bottled eggplant spread). Recently, a colleague brought me a few jars at a team-building event, and they didn’t last long.
The country’s natural beauty is equally remarkable. Romania boasts some of Europe’s largest undisturbed forests and rich biodiversity. Access to culture is inexpensive and inclusive, whether for film festivals or opera. You don’t need to go to Vienna for an exhilarating orchestra. Personally, I’m planning a week-long trek in the Carpathian’s next summer, moving from one mountain resident’s home to another, for just $30 per night, including food and lodging. Via Transilvanica was featured by Time Magazine in world’s greatest places. the Romania’s blend of affordability, access to nature, and cultural richness creates an environment that nurtures personal well-being, and hence individuals that are content and incorruptible by the distractions of capitalism.
Stretching the Penny: Cost Efficiency
Businesses operating in Romania benefit from lower operational costs. The average monthly net salary was approximately €750 in 2022, significantly lower than in Western Europe. Office rental costs in major cities are competitive, allowing companies to allocate more resources to innovation. If it weren’t for Romania, AlphaBlock wouldn’t have come this far. Building deep tech and undertaking decade-long research either requires deep pockets, significant venture funding, or an ecosystem like Romania’s.
From $75 Billion to $500 Billion Market Capitalization
Growing from the current $75 billion to $500 billion in market capitalization within a decade may seem ambitious. But with a long stock market history and a high number of CFAs who prefer working at home rather than going to London, a population with more disposable income, market knowledge and experience, I believe the odds are stacked in Romania’s favor. The potential for growth is significant, especially with the rise of tech companies and increased investor interest.
Of course, politics plays a role. However, once an improving lifestyle becomes the norm, even politicians understand where the money comes from. Populist politicians, even if they appear to pander to the masses, are not naive. Business and economy will continue to grow despite seemingly insurmountable current political challenges.
One of the Lowest MCAP-to-GDP Ratios Among Emerging Markets
Romania has one of the lowest MCAP-to-GDP ratios among emerging markets, making it extremely undervalued compared to global peers. With a GDP of around $300 billion and a market cap of approximately $75 billion, the ratio is just 25%. In contrast, developed markets often exceed 100%. Add to this a few hundred billion dollars in infrastructure spending, and it becomes a no-brainer why the world has yet to fully recognize Europe’s powerhouse in the east. I’m confident this gap presents a tremendous opportunity, and I’ll be here reminding you—I told you so.
I love India. But everyone knows about India. I wrote about India in 2009 when I spoke about Long India-Short China. That trade turned out right.
https://www.business-standard.com/article/markets/long-india-short-china-109022300072_1.html
Mukul Pal