Stimulating exports eases deficits, Nobel-awarded economist Joseph Stiglitz says at event in Romania

Joseph Stiglitz, the famous economist and professor at Columbia University in New York, and winner of the Nobel Prize in economy in 2001, told an audience in Cluj, Romania, that governments must stimulate exports and key sectors when facing deficits.

Stiglitz was in Romania on Thursday, May 8, to receive the title of Doctor Honoris Causa from the Babeș-Bolyai University of Cluj-Napoca. In a discussion with the press, he also spoke about "recipes" for countries facing economic problems.

It should be noted that statistical data from recent years show that in Romania, expenditures generally exceed state revenues, and the value of imports exceeds exports.

Other economic issues are plain to see. Romania had the highest current account deficit in the EU in the fourth quarter of 2024. Romania also had the highest budget deficit in the EU, at 9.3% of GDP, last year. The country also lags behind in implementing the National Recovery and Resilience Plan, and risks losing EU funds. The national currency is weakening, meanwhile, and political instability led to higher borrowing costs.

“There are two recipes for response. One has a history of failures: austerity. You cut government spending, which slows the economy even more,” says Stiglitz. “The idea is that if you slow the economy enough, you import less and the trade deficit goes down. But that means killing the economy to save the trade deficit. What you need to do is think more about how to develop the economy and increase exports. A more proactive agenda,” he told the audience, according to Economedia.

According to the economist, the fact that austerity programs do not work can be seen in Greece, which is just returning to the same per capita income. “I call that failure, they call it success, that after 15 years you’re back in the same place. Much of the income goes abroad, because Greece had to sell key assets. Although per capita income seems to have recovered, Greeks' per capita income has not. This kind of austerity policy doesn’t work,” he concluded.

Professor Joseph E. Stiglitz is one of the most important specialists worldwide, internationally recognized for his contributions in the fields of economics and public policy. He is also co-chair of the High-Level Expert Group on the Measurement of Economic Performance and Social Progress at the OECD, chief economist at the Roosevelt Institute, and was vice president and chief economist of the World Bank, as well as chairman of the Council of Economic Advisers in the United States.