Influence factors of industrial confidence indicator for Romania and other states members of EU.

• Author: Gagea, Mariana

1. INTRODUCTION

   We aim to analyze the correlations between the industrial confidence indicators and the reference series from the industrial sector represented in this paper by the industrial production index at EU (27) level. At the same time, we aim to identify the factors contributing to the formation of industrial confidence. For this purpose, we analysed some of the most important macroeconomic, national, European and world indicators. The testing of the hypothesis according to which industrial confidence is strongly correlated with the industrial production index and with other macroeconomic indicators is made with Pearson's correlation coefficient. The formation of industrial confidence in relation with the macroeconomic indicators is explained using the binary Logit model. The confidence indicators indicate only the direction of changes from the industrial sector and not the size of changes. Therefore, we treat confidence as a binary variable indicating the positive and negative evolution, respectively. Finding the models that explain best the industrial confidence is limited by the multicollinearity of independent variables, a hypothesis which is generally difficult to satisfy in economic modeling, given the interdependence between the economic phenomena.

   The research has been conducted on a sample made up of 7 countries: Romania, Bulgaria, Greece, Italy, France, Germany, and United Kingdom. The data were registered in the period January 2005 November 2011 and they have been taken over from Eurostat and OECD sites. The processing of these data was made by Eviews 6.0 programme.

   Researches on the relations between confidence indicators and the national and European industrial production and others macroeconomic indicators have also been carried out by J.J. Vanhaelen, L. Dresse (2000), P. Bengoechea and G.P. Quiros (2004), Jz A. Al-Eyd, R. Barrell. and E.Ph. Davis (2009), A. Paradiso, B.B. Rao, P. Margani (2011).

2. DESCRIPTION OF DATA

   The confidence indicator for industry belongs to the category of composite indicators obtained by the processing of data from the business and consumer surveys, which are conducted in the different sectors of the economy: industry, services, construction and retail trade, as well as consumers. Each confidence indicator is calculated as the arithmetic mean of balances of answers to specific questions selected from the question sets of individual surveys so as to be as correlated as possible to the reference series in the field. The industrial confidence indicator is calculated based on the answers to 3 questions (Do you consider your current overall order books to be ...?, Do you consider your current stock of finished products to be ...?, How do you expect your production to develop over the next 3 months? It will ...,) whose answers are tightly connected to the reference series from industry, such as the increase rate of industrial production at EU level or in Euro area. Balances are calculated for the answers to each question as the difference between the positive answers and the negative answers measured in percentages from the total number of answers (European Commission, 2007). The comparability of confidence coefficients at EU level is ensured by the joint methodology on the carrying out of business and consumer surveys at the EU (27) Member States' level.

   The confidence indicator only shows the direction of evolution of confidence in the specific sector of economic activity and not the size of the changes occurring in this sector. Taking into consideration this aspect, we deem as adequate the transformation of "confidence indicator" variable into a binary variable that shows only the positive and negative perception. In this paper, the industrial confidence indicators is symbolized by "CII_c", where "c" represents the symbol of the country to which the indicator belongs: Romania--RO, Bulgaria--BG, Greece--EL, Italy--IT, France--FR...