The impact of the economic crisis in the IT&C industry – evidence from Bucharest

Abstract

Despite its peripheral location within the European metropolitan system, Bucharest has significant competitive advantages – large scale market, high-skilled labour pooling, dynamic business environment, institutional capacity, and knowledge organizations. The location of MNCs has enhanced the domestic small-scale entrepreneurship and the emergence of an innovative IT&C cluster. As the world economic crises stroke almost everywhere, in the case of Bucharest it was enhanced by a political crisis which diminished the industrial growth. In this context we focus on the IT small and medium enterprises which, by surviving the crises and developing even more, show clear evidence of strengthening the cluster identity. Based on the two-digit CANE data on employment, the paper analyzes in an empirical way the IT firms from Bucharest between two representative moments: 2007 the year of maximum growth for Romania and 2010. We attempt to identify the factors contributing to the growth of the cluster and to assess the contribution of the cluster to the generation of regional wealth and jobs. The results shows that, despite of the crises, the local entrepreneurship alongside the continuous foreign interest in the local workforce have pulled together an emerging industrial cluster.