01_Savoiu Gheorghe:tipska.qxd 5 Gheorghe Săvoiu1, Ondrej Jasko2, Marian Ţaicu3 1University of Pitesti, Faculty of Economic Sciences, Romania 2University of Belgrade, Faculty of Organizational Sciences, Serbia 3 University of Pitesti, Faculty of Economic Sciences, Romania The Evolution of the Public Debt in Romania and Serbia, During and After the Global Recession UDC:336.27(497.11) ; 336.27(498) ; 338.124.4(100) DOI: 10.7595/management.fon.2014.0021 XIV International Symposium SymOrg 2014, 06 - 10 June 2014, Zlatibor, Serbia 1. Introduction Debt issues dominate economic history, and the economic history of the last three decades has dilated, in points of volume and impact, up to limits that are hard to accept and not in the least anticipated. Two con- cepts prevail in the language of this significant economic chapter: external/foreign debt and public debt, and in particular the latter has caught the attention of recent research. External Debt (ED) means an amount in foreign currency payable, at a given point in time, by an economy to other economies and/or international financial institutions, in keeping with the loans received by the govern- ment and private companies, under the government’s guarantee, and is to be paid over a period longer than one year. This sense is used in international statistics, and is understood as external public debt, not includ- ing loans with maturities under one year, which were contracted without the government’s guarantees. For- eign debt can be gross or it can be net, after deduction, from the gross external debt, of its own claims in relation to non-residents. In determining the net foreign debt, only claims (rights) are taken into account, or those that can be easily mobilized (for which the perspective of collecting them from foreign debtors is clear). Public Debt (PD) represents all the obligations that the state (government) assumes when contracting in- ternal and/or external loans to finance public economy. Public debt is related to the financial intervention of the state (government) in the economy, whose aim is to form public capital, stimulate investment, increase employment. In its broadest sense, public debt also includes a visible debt, resulting from cash deposits in public vaults, which is payable at any time by the depositors. In terms of material content, it can consist of goods and values, in terms of its destination it may consist of consumption and of production, and in terms of duration it may be long-term, short-term, etc. Encyclopaedia Britannica’s definition shows that “public debt represents the obligations of governments, particularly those evidenced by securities, to pay certain sums to the holders at some future time, being distinguished from private debt, which consists of the obli- gations of individuals, business firms, and nongovernmental organizations.” The debt owed by national governments is usually referred to as the national debt and is thus distinguished from the public debt of state and local government bodies (http://www.britannica.com/). Much of the literature on the topic of debt produced in recent years has tried, and it is still trying, to provide and present genuine solutions and new methods of reassessment of those phenomena and thresholds, Management 2014/72 This paper describes a special evolution of debt of Romania and Serbia, during and after the recently com- pleted global recession, with a focus on public debt. After a brief theoretical introduction and an equally short review of the recent literature devoted to the subject, the authors stress both the common elements and the particular aspects of the upward trends of borrowing in the two economies, concluding with some final re- marks and a tentative anticipation of short-term and medium-term evolution. Keywords: external or foreign debt (ED), public debt (PD), governmental debt (GD), Gross Domestic Product (GDP), export (X). and especially of forecasting external and public debt (Knedlik, Von Schweinitz, 2012), or even extends the analyses related to the same range of problems in geographic behavior areas (Hrvoje, 2013) considered to be similar in point of behaviour. The contemporary theory continually redefines the essential role of foreign and public debts and the finan- cial development of an economy, while delimiting the number of debt sustainability problems that are in- creasingly acute, so the tendency always appears to expand the universe of financial research and enrich it with new instrumental or cross-disciplinary solutions – crossdisciplinarity being accepted today as the ap- plication of field-specific methods and their recognized use in fields that are altogether different from the original ones, with special effects and an increased relevance in understanding the phenomena in question (S�voiu, 2014). In this regard we can mention the identification and statistical quantification of certain limits through indicators having the nature of restricting debt by the budget, going as far as the maintenance, through close monitoring, low thresholds for reference interest rates, a phenomenon of quantification of in- cipient “financial repressions”, through statistical indicators (Reinhart, 2012; Prabha and Savard, 2013), continually assessing and predicting a phenomenon which is hard to achieve in practice, suggestively called liquidation of public debt, particularly aimed at government debt (Reinhart and Sbrancia, 2011). A new approach to adjusting the level of public debt in a more sustainable manner is more clearly distin- guishable, based on a slightly more stable fiscal measures, or on measures with no temporary character, there being constant monitoring and the analysis of results being conducted at an ever shorter time inter- vals, noting that tax recovery and reducing debt, however, require a long time, as process management ac- tivities (the current Eurostat indicators system operates, during the recession, and especially after recession, with quarterly periodicity). The attempt to scale, through innovative indicators, “the hidden areas of public debt” (IMF Survey, 2013) is another original solution to analyzing debt, stratified in keeping with the level of development of the economies. Kenneth Rogoff and Carmen Reinhart, who analyzed and quantified the phenomenon of debt over nearly eight decades, between the two great historical recessions (one starting in 1929, and the other starting in 2007), note that, after more than three years of financial crisis of the system, plus another three years of re- covery (basically, over a period of about six years, i.e. the duration of the latest recession in the Balkans), the debt of a country tends to increase, on average in the first three years, by 86 percent of its original level, and after six years it tends to double in relation to the volume of exports, because of these very hidden areas of the debt; the delimitation of the hidden area especially regards commitments for future budgetary pay- ments related to the pension scheme, which is under the pressure of an aging population; thus, those thresh- olds or limits of debt are set, where its effects turn from positive to negative, and the debt itself becomes unsustainable. (Cecchetti, Mohanty, Zampolli, 2011). In the European Community the preference is maintained related to primarily evaluated public debt, and more especially government debt, whose theoretical limit amounts, in general terms, within the European Union (EU) and European Monetary Union (EMU), to 60% of GDP. In Romania, secular studies (Reinhart, Ro- goff, 2010) place the alarm threshold even lower (at about 41%), while for Serbia, which has a much higher per capita income and a higher degree of development, the general alarm level remains that proposed in pre-accession (EU) and (EMU), i.e. the same 60%. The intention and the originality of the present paper is to exploit the method of confronting, in statistical terms, the phenomenon of borrowing and the statistical indicators in the two Balkan economies (that of Ro- mania, a member of the EU, and of Serbia, which is currently in the pre-accession phase), behaving in a rel- atively similar ways in their modern history of nearly one and a half centuries. 2. A brief statistical analysis of the alarming upward evolution of public debtin Serbia and Romania Due to a series of social and geopolitical discontinuities in Serbia, the analyses of public debt in the period before the year 2000 are not objective. After that period, the public debt of the Republic of Serbia shows two distinctly different trends: • a decreasing trend between the years 2000 and 2009, and • an increasing trend since 2009 until today. 6 2014/72Management Figure 1: Public debt of the central government share of GDP% Source: Uprava za javni dug, February 2014, page 9 If we analyze the trend and the basis for the decrease of the public debt share of the GDP in the period up to the year 2008, we can draw certain important conclusions. The most significant debt reduction occurred in the year 2004, based on agreements on debt write-off (66% of the debt to the Paris Club, 62% of the debt to the London Club of Creditors (until 2003)). A further reduction is the result of repaying a debt of 1.3 billion euros on the basis of old foreign currency savings and domestic debts based on delays. Since 2004, the ac- celeration of the privatization process and the use of privatization revenues to cover the budget deficit made it possible to achieve a low amount of new loans, and in 2008 Serbia was in the group of low-debt countries. Figure 2: Fiscal budget deficit/suficit share of GDP% for Serbia, 2007-2012. Source: Šljivić, S.,Jevtić, B., Šljivić, S. 2013. page 508 Since 2009, with the first effects of the global economic crisis, the public debt starts to grow both in ab- solute figures and in a share of GDP. The main causes for this increase were: primary fiscal deficit which was financed by the loans, the activated government guarantees for debts of public enterprises, but also a re- markable decline in net foreign direct investments. The correlation between the budget deficits and the pub- lic debt points to the key motive for borrowing, and that is maintaining the budget stability, while the relationship between the public debt trends and economic activity is negative. For example, Romania can be extrapolated, as lying relatively close to the average trend of the South-East- ern European area, and especially the Balkans. Romania makes a relatively common instance for the two areas in point of overall trends in the phenomenon of borrowing. We exploit three waveforms that cyclically dismantle (in a Kondratiev manner) three similar historical periods in the two economies, defined by up- ward-downward repeatability, based on the visual support of the graph for a logical statistical thinking, the quality of which is recognized for the phenomenological approach to temporal variation (Figure 3). 7 Management 2014/72 Figure 3: Debt dynamics in modern Romania for two and a half Kondratriev type cycles Source: Săvoiu, G., (2014), figures 5-7 pages 5-7. The main statistical indicators of public debt are the indicators of public indebtedness (PD, PD/GDP, PD/in- habitant and total annual change of PD in %), and, separately, the indicators of public debt service or the annual financial burden of public debt repayment (PDS, PDS/GDP, and PDS/inhabitant) (Săvoiu, Apostol, 2013). A breakdown of the values of these indicators in the first category shows rising levels developments, and especially increasingly alarming dynamics. Table 1: Major statistical indicators of the level of public debt of Romania and Serbia, during and after the crises Source: Economist Intelligence Unit, available on-line at: http://www.economist.com/content/global_debt_clock. The public debt in early 2013 was, according to the World Bank data, 172.5% of Romanian exports, and 182.2% for Serbia, as the general theoretical limit accepted for PD/X is 200%. Much more serious, however, is the debt level reached after six years of the analysis, i.e. multiplied by 2,224 times for Romania, and by only 1.49 times for Serbia. At the same time, the negative legacy of debt (i.e. the debt inherited) increases from the parents to their children by 2.24 times in Romania, and by 1.52 times in Serbia. The GDP/inhabi- tant indicators in the two economies are totally different at the beginning, which appeared to require sepa- rate analysis thresholds, but are strikingly close at the end of the period analyzed. The most serious evolution remains the structural one: the share of public debt in the GDP in Romania increased from 17.1% to 31.9% and 35.8% to 48.5% in Serbia, in about six years of recession and post-recession, and the outlook becomes really alarming, asking for immediate concrete policies with major financial impact. Table 2: Short-term and medium-term outlook for public debt indicators in Romania and Serbia Source: Economist Intelligence Unit for public debt* (http://www.economist.com/content/global_debt_clock). 8 2014/72Management Romania Serbia 2007 2008 2009 2010 2011 2012 2007 2008 2009 2010 2011 2012 Public debt - PD – mil. USD 24863 33906 39704 45280 48645 55293 12526 12901 12908 14539 16105 18667 PD/GDP (%) 17.1 19.6 22.3 26.8 29.3 31.9 35.8 30.4 30.8 37.1 43.5 48.5 PD/Population - USD/inhabitant 1152 1576 1849 2108 2268 2580 1695 1748 1754 1985 2205 2567 Total annual PD change (%) 47.3 36.4 17.1 14.0 7.4 13.7 2.4 3.0 0.1 12.6 10.8 15.9 Romania Serbia 2013 2014 2015 2013 2014 2015 Public debt - PD – mil. USD 59481 63670 67859 21359 24052 26745 PD/GDP (%) 34.4 36.9 39.4 60.3 72.2 84.1 PD/Population -USD/inhabitant 2778 2975 3172 2950 3333 3715 Total annual PD change (%) 7.6 7.0 6.6 14.4 12.6 11.2 The answer to the question whether there is a statistical correlation between public debt and economic growth, or, to put it differently, if the public debt is justified as a factor of development and, especially, as in- frastructure investment support intended to change the economy, is disappointing. Table 3: Associable or correlated potential indicators characterizing public debt and economic growth Source: http://data.worldbank.org/indicator A correlation matrix, even considered for a very small number of terms, delimits both similar and different behaviours in the two economies according to the values of the determination coefficient in Table 4 (which contains the values of the correlation ratio, or of simple R resulting from the classic R squared): Table 4: Correlation Matrix Source: Data from table 3. Software used: EViews The analysis of the correlation between the GDP growth (%) and the PD (%) identifies an average connec- tion between public debt and economic growth, visible and relevant in Romania, which has now a much more open economy under the impact of the crisis and the recession, and also under the impact of eco- nomics of restarting growth, as a EU member, while it identifies a negative relationship, or almost a non-ex- istent one, at the limit of statistical testing, in Serbia (R= - 0.209301). Large inflows of foreign capital through credits, privatization and foreign direct investment (FDI) were a major source for financing high consumption in Serbia in the period between 2005 and mid 2008 (Popovic, N. Jaško, O, 2012) , which had an impact on economic activity, with the GDP growth rate higher than 5%. How- ever, the economic crisis refocused the use of these sources to cover the budget deficit, in which, opposite of the required, a permanent reduction of spending on infrastructure projects and the economy (up to 5% of the national budget) was observed, while the allocations for salaries in the public sector and pensions grants remained at the same level (about 55% of the national budget). On the other hand, the FDI were al- most stopped, given that many companies performed operations contractions during the crisis in order to adjust to these new circumstances. The reduction or stabilization of the public debt is possible on the basis of reductions in public spending or through tax increases (budget inflows). In the short term, reforms in public sector in order to reduce budget 9 Management 2014/72 Romania Serbia Year GDP growth (%) PD(%) GDP/ capita PD/ capita GDP growth (%) PD(%) GDP/ capita PD/ capita 2007 6.3 47.3 8170 1152 5.4 2.4 5277 1695 2008 7.9 36.4 9949 1576 3.8 3.0 6498 1748 2009 -6.8 17.1 8069 1849 -3.5 0.1 5498 1754 2010 -0.9 14.0 8139 2108 1 12.6 5073 1985 2011 2.3 7.4 9064 2268 1.6 10.8 5964 2205 2012 0.4 13.7 8437 2580 -1.7 15.9 5190 2567 Romania Serbia GDP growth (%) PD(%) GDP/ capita PD/ capita GDP growth (%) PD(%) GDP/ capita PD/ capita SER01 SER02 SER03 SER04 SER05 SER06 SER07 SER08 SER01 1.000000 0.655422 0.644427 -0.457696 0.907705 -0.062483 0.486256 -0.161364 SER02 0.655422 1.000000 0.160833 -0.906713 0.722941 -0.628160 0.178830 -0.666111 SER03 0.644427 0.160833 1.000000 -0.068513 0.405304 -0.089228 0.932734 -0.053051 SER04 -0.457696 -0.906713 -0.068513 1.000000 -0.660397 0.827000 -0.211983 0.897560 SER05 0.907705 0.722941 0.405304 -0.660397 1.000000 -0.209301 0.318033 -0.414691 SER06 -0.062483 -0.628160 -0.089228 0.827000 -0.209301 1.000000 -0.371959 0.897362 SER07 0.486256 0.178830 0.932734 -0.211983 0.318033 -0.371959 1.000000 -0.271773 SER08 -0.161364 -0.666111 -0.053051 0.897560 -0.414691 0.897362 -0.271773 1.000000 expenditures may be sufficient to stabilize the debt of Serbia, while the long-term debt reduction needs tax policy that is associated with the stimulation of investments in the real sector and in individual demand. Par- ticulary acceptable operations are those that operate in both directions, especially Public Private Partnership (PPP), which do not increase public debt, but rather substitute public sector investment and increase de- mand. On the other hand, after statistical confrontation between the two countries, the values of R highlight a strong positive relationship (of an evolving nature) between the dynamics of economic growth in Romania and Ser- bia, and between the debt dynamics per inhabitant, as well as a contradictory reversed, or staggered (R= - 0.628160) relation between the temporal trends of indebtedness of the two countries, according to their fi- nancial and monetary policies which are distinctly separate at the moment, but are probably likely to be common in the near future, as EU member states. From this emerges an important remark, highlighting the advantages of EU integration, i.e., the synchronicity and integration into the EU economic cycle can bring about, through “contagion”, in addition to other advantages, some optimization in debt policies: public debt is much better correlated with economic growth and much more appropriate in times of recession in Ro- mania, in comparison with Serbia; the remaining trends are similar for the two economies. A tentative econometric modelling could only be achieved for the Romanian economy (Săvoiu, Apostol, 2013), where comparative data are available for a longer period of time (minimum 15 years or items in the model). Table 5 summarizes two specified econometric models for Romania, parameterized and validated, with pub- lic debt as endogenous variable (a unifactorial and multfactorial model as possible examples). Table 5: Two econometric models of public debt (PD) in Romania between 1997 and 2012 Software used Eviews. Source: (Săvoiu, Apostol, 2013a, page 25-26) Note: Foreign Direct Investment as % of GDP = FDI/GDPi; European Union Fixed Capital Formation as % of EU GDP = EU FCFi. The major conclusion of this analysis shows that econometric models can be made to simulate and estimate or predict the dynamics of public debt, as well as some aspects of the most important exogenous variables that contribute to an optimized and efficient debt service applied to various periods or horizons. Some final remarks The present paper evolved from the idea to emphasize the importance of public debt, of statistical con- frontation on this issue between the economies of Romania and Serbia in general, and also the assess- ments and modelling which are possible, but did not limit itself to the public debt, which requires a special, detailed treatment, exceeding the space of a midsize paper. The significance of public debt issues goes be- yond many other important economic policy issues relating to accession and convergence processes, be- cause of its effect on major economic equilibria, and especially on economic growth, optimizing the ability to consistently and sustainably manage the public debt process, turning it into a process of investment and development impact, in parallel with a process of inflation control. Of course, external debt is also important (i.e. at the beginning of 2013, Romania’s foreign debt already ex- ceeded the alarm level of 100 million, i.e., about ¾ of the official GDP), but the monitoring tools to do that are considerably improved, the solutions are much more efficient and the experience of both economies is already relevant from the periods prior to transition, through the balance of payments and balance of trade analyses. 10 2014/72Management Dependent Variable: PD Method: Least Squares Specified models for the 16 – term series R-squared F-statistic PDi = 31.90 + (- 2.41) × FDI/GDPi + i 0.621825 23.01993 PDi = 111.70 + (- 1.55) × FDI/GDPi + (-3.56) × EUFCFi + (-0.669) × Savings in EUi + i 0.802784 16.28232 The aggravating prospects of global public debt, which is likely to exceed USD 55.802 billion not later than the end of 2015, and the prospects of Romania’s and Serbia’s public debt, which at the end of the same year 2015 will amount to around USD 67.9 billion, and 26.75 billion respectively, require statistical analyses based on innovation, both instrumentally and methodologically, foresight solutions and policies focusing on new econometric modelling and simulations. In the past six years, the public debt has followed an upward tra- jectory aggravating through its consequences, speeding up, and even defining a globalizing process. The public debt has relevant advantages and disadvantages. The first category includes help to the National Bank concerning the monetary policy, the ability to avoid the negative effects of taxes against incentives and increased government spending, finally managing to develop the economy of any country, but leaving an unsustainable legacy for the generations to come. However, when the public debt exceeds the theoret- ically admissible limit, more and more long-term economic difficulties are generated, and this is what really happens in the cases of Romania and Serbia. While there are no previous secular studies for the economy of Serbia, which is on the eve of EU accession, and which induces the threshold of 60% of GDP as the natural limit of the moment, there is ample interna- tional research for the Romanian economy. Thus, in a famous 2003 paper, which examined debt carefully in relation to GDP, a threshold of 41% of GDP was established; the effects of exceeding the threshold of the debt can induce not the economic growth required of an EU economy towards the EU-28 average, but rather diminish its economic growth (Reinhart, Rogoff and Savastano, 2003). The analysis in that paper highlights, among other things, that both Serbia and Romania have exceeded the debt threshold in the short and medium term, that the debt threshold is rapidly and dangerously approaching the sustainability limit the of public debt, i.e. 60% and 41% of GDP respectively, or the maximum level ac- cepted by investors for these countries. The paper emphasizes the importance of the phenomenon, and the need to generate new economic policies that do not neglect the signals provided by the general public debt indicators, and by internal debt, especially, firstly, because “internal debt is already nearly two-thirds of the public debt” (Reinhart and Rogoff, 2011); secondly, because the indicators are becoming ever more explicit and turning into increasingly lower warning thresholds; and thirdly, because the domestic market needs to be increasingly investigated and monitored, compared to similar markets and simialr effective solutions, largely ignored in the literature on the complex phenomenon of public debt. REFERENCES [1] Cecchetti, S., Mohanty, M.S., Zampolli, F., (2011). The real effects of debt, Symposium Achieving Max- imum Long-Run Growth, Jackson Hole,(USA), pag. 1-34, available on-line at: http://www.bis.org/publ /othp16. pdf. [2] Hrvoje, J., (2013). Comparative Analysis of External Debt Indicators in Croatia and Southeastern Eu- ropean Countries*, Ekonomska Misao i Praksa, vol. 22 (1), pages 197-220, available on – line at: http://search.proquest. com.ux4ll8xu6v.useaccesscontrol.com/docview/1400678213?accoun- tid=15533. [3] Knedlik, T., Von Schweinitz, G., (2012). Macroeconomic Imbalances as Indicators for Debt Crises in Eu- rope, JCMS-Journal of Common Market Studies, Vol. 50 (5), pages 726 – 745. [4] Prabha, A., Savard, K., (2013). Financial Repression: Antidote for Depression or Prescription for Fi- nancial Trouble?, pages 1-13, available on –line at: https://www.milkeninstitute.org/pdf/FinancialRepression.pdf [5] Popović, N. Jaško, O (2012). Ekonomski predlozi i dileme, SEC, Beograd, page 4-16 [6] Reinhart, C. (2012). The return of financial repression, Financial Stability Review, Banque de France, issue 16, pag. 37-48, available on - line pe: http://www.banque-france.fr/fileadmin/user_upload/ banque_de_ france/ publications/Revue_de_ la_ stabilite_financiere/2012/rsf-avril-2012/FSR16-article-04.pdf [7] Reinhart, C., Sbrancia, B., (2011). The Liquidation of Government Debt, NBER Working Paper 16893, March, pag. 1-66, available on – line pe : http://www.nber.org/papers/w16893. [8] Reinhart, C.M., Rogoff, K. S. and Savastano, M., (2003), Debt Intolerance, William Brainerd and George Perry (eds.), Brookings Papers on Economic Activity, pp. 1-74, available on- line at: http://www.nber.org/papers/w9908. [9] Reinhart, C., Rogoff K., (2010), From Financial Crash to Debt Crisis, NBER Working Paper 15795, March 2010. American Economic Review. Available on-line pe: http://www.reinhartandrogoff.com/data/browse- by-topic/topics/9/ including data from Eurostat for 2011 and 2012. 11 Management 2014/72 12 2014/72Management [10] Reinhart, CM and Rogoff, KS (2011). The Forgotten History of Domestic Debt, Economic Journal, 2011, Vol. 121 (552), pp. 319 – 350. [11] Săvoiu, G., (2014). The Kondrative type of cyclicality of Romania’s economy, argued through three es- sential statistical indicators: GDP, CPI and debt, Romanian Statistical Review, vol. 62(1) forthcoming, (Conference to Scientific Seminar Octav Onicescu, Romanian Statistical Society on the 20th February, 2014, available on – line at: http://www.insse ro/cms/ro/content/seminarul-stiintific-octav-onicescu . [12] Săvoiu, G., Apostol, L., (2013). Defining Public Debt and External Debt and Revealing Their Statistical Trends and Econometric Models, Romanian Statistical Review, vol 61 (Suplement 4) pages 93-104. [13] Săvoiu, G., Apostol, L., (2013a). Econometric Models, Methodology and Trends Regarding Public Debt and External Debt, Romanian Statistical Review, vol 61 (9): 24 - 35. [14] Šljivić, S., Jevtić, B., Šljivić, S.: Fiskalna konsolidacija, ekonomski rast i socijalne nejednakosti u srbiji, u zborniku: Institucionalne promene kao determinanta privrednog razvoja Srbije, Ekonomski fakultet Univerziteta u Kragujevcu, 2013. godine. *** IMF (2013), High Government Debt Threatens Growth Prospects, IMF Survey, Washington, Janu- ary, available on –line at: http://www.imf.org/external/pubs/ft/survey/so/2013/NEW010813A.htm *** Encyclopaedia Britannica, available on-line at: http://www.britannica.com/EBchecked/topic/482318/public-debt *** Economist Intelligence Unit available on-line at: http://www.economist.com/content/global_debt_clock. http://www.javnidug.gov.rs/upload/Bilteni/Bilten%20CIR/2014/Mesecni%20izvestaj%20Uprave%20za %20javni%20dug%20-%20Februar%20cir.pdf Receieved: June 2014. Accepted: September 2014. Gheorghe Săvoiu University of Pitesti (Romania), Faculty of Economics gheorghe.savoiu@upit.ro or gsavoiu@yahoo.com Gheorghe Săvoiu, PhD, is Associate Professor at the Department of Accounting, Faculty of Economics, University of Pitesti (Romania). Gheorghe Săvoiu graduated with MBA from Bucharest Academy of Economic Studies (Commerce Department – Commerce section), and acquired his PhD degree in Economic Science from the Faculty of Economic Cybernetics, Statistics and Informatics, Bucharest Academy of Economic Studies (Romania). In addition to pedagogical activities, he held a position of manager at the General Board of Statistics Argeş County – Pitesti. He held a position of dean to Finance – Accountancy Faculty, to Constantin Brâncoveanu University, Pitesti, between 2003 and 2006. Since 2014, he is also an associate researcher at the INCE "Costin C. Kiriţescu" of the Romanian Academy, part of the new Centre of Mountain Economics CE- MONT. He is a (co)author of more than 30 books, of 20 papers ISI Thompson (Web of Knowledge), with Hindex ISI Thompson = 4 and of more than 200 indexed journal and conference papers. He has been a project manager or a member of the project team in more than 10 projects. The major domains of his interest include: statistics, econometrics, econophysics, sociophysics, logic, philosophy, economics, marketing research, human ecology, management methods, demography, price universe and interpreter indices, rural tourism. About the Author 13 Management 2014/72 Ondrej Jasko University of Belgrade Faculty of Organizational Sciences jasko@fon.bg.ac.rs Ondrej Jaško, Ph.D., is full-time professor at the Faculty of Organizational Sciences, University of Belgrade, and currently lectures at several courses in the area of business system organization. His teaching and research interests include organization theory, organizational models, management and change management. During his university career, he was Chief of Department for Business System Organization, Vice-Dean and President of the Master Studies Council. He is a (co)author of more than 15 books and monographs. He has also published more than 100 papers at various scientific conferences and 35 articles in international and national journals. As an executive officer or a team member, he was involved in more than 20 research projects. As a business consultant, he led projects of organizational design in some of the most significant companies in the Balkan region. Marian Ţaicu University of Piteşti, Faculty of Economic Sciences taicumarian@yahoo.com Marian Ţaicu is assistant professor at the Faculty of Economic Sciences, University of Piteşti, Romania. His major research interests are management accounting, controlling and multidisciplinary application of business related disciplines. He has published more than 40 papers in scientific journals or conference volumes and is a coauthor of 9 books. He currently works as assistant editor for Econophysics, Sociophysics & other Multidisciplinary Sciences Journal (ESMSJ).