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Bucharest, a top-performing knowledge centre, report says

  • In Bucharest, close to 12% of the working age population is employed in brain business jobs, making it one of the top knowledge centers of Europe.
  • The brain business jobs concentration in Bucharest is slightly higher than Amsterdam and notably higher than Budapest, Helsinki, Brussels, Köln, Vienna and Berlin.
  • The challenge for Romania is to develop knowledge-intensive firms also outside the capital region, while simultaneously deepening Bucharest’s strengths.

According to The Geography of Europe’s Brain Business Jobs, the latest report from the European Centre for Policy Reform and Entrepreneurship (ECEPR), supported by NC Advisory AB, advisor to the Nordic Capital funds, Bucharest has an unusually high share of employment in ‘brain businesses’ – companies that compete through their brain power and expertise.

The new study, which is aimed at businesses and investors making a strategic choice about where to locate or invest, shows that more than 3% of the working age population of Romania is is employed in highly knowledge-intensive companies. This is a lower share than the European average of 5%, yet the Romanian capital region stands at top.

Dr Nima Sanandaji, President of the ECEPR, said that the overall trend is that Central- and Eastern European countries are catching up to Northern and Western Europe. Romania has a chance to rapidly climb the index, by continuing to develop higher learning and perhaps attract back some of the skilled young Romanian workers that are employed in places such as London and Paris.

Weaknesses and strengths

In terms of industry sectors, Romania’s strengths lie in telecom, followed by high-tech manufacturing and advertising & market research. On the other hand, Romania lags behind when it comes to areas such as design, engineering & architecture as well as head offices & management.

Changing geography of successful enterprise

Europe is increasingly a skilled-based economy, with growth happening where the brains are. A new generation of IT-specialists, engineers and other knowledge workers are emerging from the universities of Central and Eastern European countries. While some of these talents do move to places such as London and Zurich, many settle in the capital regions of their home countries. The result is that the geography of successful enterprise is changing.

Regional differences

In Romania, brain business jobs are highly focused to the Bucharest area, with 11.7% of the working age population employed in highly knowledge-intensive firms. Vest comes in on second place with 3.3% brain business employment, followed by Nord-Vest (2.9 percent), Sud-Vest Oltenia (1.2 percent) and lastly the three regions Sud-Muntenia, Nord-Est and Sud-Est which all have 1.3 percent brain business jobs concentration.

In a time when Europe is rapidly moving towards a knowledge-intensive economy, it is important for regions to develop brain business jobs. These jobs are the driver for future economic well-being, and need to evolve not only in the capital region but throughout the country,” Dr Sanandaji explains”

Cost of living a major obstacle

The key for the success of knowledge-intensive industries is to attract talent. Regions with a very high cost of living, face a disadvantage. In places such as London, Paris and Stockholm firms must pay high wages for programmers, engineers and other knowledge workers.

An advantage of Romania is the lower cost of living, which can be used as a carrot to retain knowledge workers and perhaps encourage those who are working abroad to re-locate back home. This is a real possibility in a time when digital technology makes it possible to easily co-operate across the borders.

The study finds that knowledge regions with lower costs of living and correspondingly lower wages have a competitive advantage. There are three keys to success. Regions need to invest in social capital through higher education and adult learning. They need to encourage business and connectivity to the rest of Europe. And they need to keep the cost of highly skilled labour down, through tax policy and housing policy that reduces the cost of living,” Dr Sanandaji says.

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