Cluj-Napoca: Lessons on dealing with the brain drain, Part II

A talk with Calin Hintea, Professor at Babes Bolyai University, about exporting the city's anti-brain drain policy and the key role of mayors

In Part II of this article, Calin Hintea, (Professor at Babes Bolyai University and one of the driving forces behind Cluj-Napoca's successful anti-brain drain strategy) explains what other municipalities can do to copy Cluj-Napoca’s approach to the loss of people and talent.

Read Part I, where we talk about the local strategy in more detail.

Since time immemorial the most valuable resource of any society has been its people. No amount of gold, oil or technology has been able to replace a young, healthy and educated population. And while this is may sound like a truism, in the 21^st century when the most sophisticated economies rely on complex service industries, ‘brains’ are the fuel of nations.

Romania, however, is in a demographic crisis and is losing people and, therefore ‘brains’, fast. Just in the last 30 years, the country’s population has shrunk by around 3 million people. In 1990, it peaked at 23.2 million and now sits at around 19.2 million, where it was in the 1960s.

The trends of demographic decline, low birth rates and serious brain drain show no signs of slowing down. Actually, according to census data, they've has been speeding up. This means that any real economic growth Romania is able to achieve is threatened by the weight of an unproductive, uneducated and old population.

Apart from the capital of Bucharest, most cities have seen a population decline in the past 30 years. One shining exception, though, is Cluj-Napoca, Romania’s second-largest city which some have described as the country’s Silicon Valley - with an economy focused on the IT sector, services, universities, sports and culture.

This turnaround is largely due to the local governance, led by Emil Boc, as well as policy developed by Babes Bolyai University. Professor Calin Hintea, the Dean of the College for Political Administrative and Communication Sciences (FSPAC) was another part of the puzzle and here he shares some of his experience with the issue in other municipalities.

 Calin Hintea

Painting a picture of Romania and Cluj-Napoca

The 1990s were a tumultuous time for many ex-Socialist countries. Some handled the economic transition better than others. In Romania, it was marked by bankruptcies, shortages and the death sentence of Nicolae Ceaușescu, the country's ex-dictator.

The GDP contracted from 42.11 billion (1989) to just 25.12 billion in 1992, according to World Bank data. Birth rates started slowing down in the same year and the country recorded its first instance when natural deaths outnumbered natural births. Since 1995, the birth-death gap has remained high - between 30,000 and 70,000 people per year. That peaked in 2021 when it reached 155,977 people.

Although 2021 was a year of statistical anomalies due to the pandemic – this data comes as a shocking bang after years of demographic decline. In fact, according to the CIA’s The World Factbook report Romania has the second highest death rate in the world, only outpaced by Serbia. At the same time, the country’s birth rate places it at the bottom of the ranking. The two indicators signal an unprecedented demographic decline. 

In Cluj-Napoca, the 1990s featured the failure and liquidation of local industry. Additionally, from 1992 to 1994, citizens saw additional impoverishment through the Caritas business, a Ponzi scheme organised with the help of ultra-nationalist ex-mayor Gheorghe Funar.

The Ponzi scheme was launched in Cluj-Napoca but then grew to the rest of the country. It failed in 1994, but not before having a pool of 400,000 individual investments accounting for 1,000 billion old lei. That year, the company filed for bankruptcy with 450 million dollars in debt. The governor of the National Bank of Romania, Mugur Isărescu, estimated that the scheme had at one point reached to run a third of the money supply of Romania.

Since entering the 21^st century, the city has experienced strong economic growth and a transition from manufacturing to services. Currently, 30% of Cluj companies are in the IT field and one out of 11 employees works there (20,000 employees in total). According to a study by the IT ARIES Transilvania cluster, the number of IT companies that were active in 2011 in Cluj-Napoca almost doubled by 2016.

Interacting with City Hall and the role of mayors

Professor Calin Hintea claims that getting a new mayor was the game changer for local policy with the first order of business being a shift away from the so-called ‘Hungarian question’. The second – finding a way to stop the brain drain with City Hall looking specifically for advice from local academics and universities.

The strategy focused on shifting the city from an industrial economy to a knowledge-based one by using a big local advantage - Cluj-Napoca is home to six universities. This means high-value human capital, which is attractive to investors. The only question, however, became: “How do you make these qualified people stay here?” One answer the team provided was: Invest in bettering the quality of life indicators.

Oftentimes, good policy proposals, grounded in solid research, meet the insurmountable wall of politics and the lack of political will. On that note, Professor Hintea explained that local authorities viewed universities and experts from an apolitical perspective – they were seen as a sort of mediator.

“We are providing them with, maybe not an academic, but a very analytical perspective. So if you put the numbers there and show them I didn’t find a lot of opposition.

If you go and present them with a scientific research piece, the results would be different. But if have a clear policy analysis people do listen. For some reason here they are quite open to listening to that.”

He explained that, for example, the first strategy the working group presented to the local council was voted in by unanimity. This he attributes to the fact that officials were able to participate, ask and discuss, which convinced them that the strategy was viable.

In this case, Mayor Emil Boc and a sympathetic majority in the local council seem to be crucial points in why local authorities were able to enact meaningful policy change. However, popular satisfaction is also an indicator, as Boc has been elected the mayor between 2004 and 2009 and again from 2012 until today. All of this is to say that the mayor’s tenure has been a unicorn moment for the municipality.

Indeed, Professor Hintea also pointed out that in his practice he has encountered many regions with very few competitive advantages, but with good local governance, a factor that helps them offer more competitive advantages.

What about other communities

Most cities are not as well positioned as Cluj-Napoca. They do not have the competitive advantages of hosting many universities or having the title of Romania’s second-largest city. Additionally, there is always the City Hall ‘wild card factor’. So how can a region without any perceived advantages adopt any of Cluj-Napoca’s lessons?

Professor Hintea pointed out that dealing with demographic and economic issues is a very big problem. He also explained that he has worked with other, less advantageous communities to export some of the know-how from Cluj.

“For example, former mining communities. Used to be rich, but suddenly the government came and said, we have news for you, everybody’s out of a job. So goodbye. Now they live on the retirement of people. In some of these areas, it is very hard to find competitive advantages.”

He continued by saying that if these advantages do not exist, local authorities can try and create them through what he called “very serious strategic analysis and profiling”. “Based on those, we can say, okay we can go to tourism or we will try to attract a type of manufacturing activity or develop culture and the creative sector.”

One very interesting example of a European community choosing to develop culture is Esch-Sur-Alzette in Luxembourg. The city was a very prominent steel producer. After the forges and factories closed down officials adopted a comprehensive culture strategy. Last year, it held the title of European Capital of Culture.

The failure or success of any ambitious policy, especially when considering long-term complex goals depends on the local leadership, according to Mr Hintea. “I have seen communities in Romania with excellent competitive advantages doing very badly and cities with lower capabilities doing quite well because the mayor was the thing that made the difference.”

One possible solution he mentioned was going back into manufacturing, the main economic driver for many Romanian communities during the second half of the 20^th century. However, he pointed out that some types of investment, specifically low-level manufacturing could be bad for a community.

“I have seen it in several Romanian communities – low-level manufacturing. Textiles, for instance, they do pants. Companies pay very low salaries, so the workers are not able to reinvest in the community, thus, the community does not develop shopping malls because the people cannot afford them. People do not spend money. Yet, the small disposable income they have, they spend in the nearby big city.”

He continued by pointing out that low-level manufacturing rarely comes with additional training for people or with auxiliary services. Moreover, the companies can disappear quite easily if they find a place where salaries can be even lower.

“For Romania as a whole... and I work with my team on a lot of strategic planning projects, from small communities like villages to small towns, to medium towns, to big towns. In 95% of the cases, the biggest problem I encounter is the brain drain. And you need to convince people to stay.”

He continued: “You go to one a community, let us say, 10,000 people, a town. About 11% of the population wants to leave. The mayor may say, well it is not necessarily a disaster, it’s only 11%. Yes, but it’s exactly the 11% that the municipality would want to keep. Young, educated, entrepreneurial.”

Professor Hintea explained that the issue is far from solved even in Cluj-Napoca. Yet, only Cluj and Bucharest are not feeling the extreme squeeze of the brain drain. At the same time, he estimates that the competition for human capital is huge. And a city needs to keep up a competitive position but also needs to catch up and develop, outperform its peers.  

“Because we’re not just competing with cities in Romania, we are now competing with, I wanted to say Europe, but it's pretty much the whole world. Because somebody can work from home anywhere in the world. Cluj-Napoca has a less advantageous position compared with a city like Salzburg, where the quality of life is much better. The salaries are better, access to other EU areas is better, the circulation of goods is better.”

Despite that, however, he believes that Romanian cities can be as competitive as their European counterparts, but only if they use their competitive advantages smartly. “Salzburg is a particular case and I would need to look at the concrete data to say yes for sure but with other areas in western Europe, yes, that we can do. We have some advantages here, the salaries are lower compared to other places, which is good for companies, very high level of qualified human resources and an entrepreneurial spirit.”