T RUCK-MOUNTED ROCKET launchers rumbled through Cluj’s city centre, followed by ranks of soldiers. Warplanes screeched low overhead. On December 1st Romania celebrated the centenary of its birth as a modern state. It is smaller now than in 1918, but unlike its former neighbour, Yugoslavia, founded on the same day, it has at least survived.

Still, many Romanians did not feel much like celebrating. The economy is growing, but 3m-4m people have left since 1990. On January 1st Romania takes over the presidency of EU ministerial meetings, but the European Commission has chastised its government for backtracking on anti-corruption reforms. Infrastructure and the public health-care system are in poor shape. Deloitte, a consultancy, ranks the country last in the EU for quality of life.

Surprisingly, perhaps, the people in this Transylvanian city feel smug. Cluj is one of only two towns in Romania whose population is growing rather than shrinking, notes Emil Boc, the mayor. He keeps a large pet turtle in his office in the magnificent town hall, dating from the Austro-Hungarian era; his flat is too small for the tank. Likewise, Cluj is too small for its 450,000 people. Construction should begin next year on homes for 200,000. Cluj’s “core asset”, says Mr Boc, is its 100,000 students. That includes more than 3,000 foreign ones, a rarity in a country where locals tend to go abroad to study.

After the fall of communism, Cluj was an “industrial graveyard”, says Calin Hintea of Babes-Bolyai University; the city’s then mayor spent his time agitating against the large Hungarian minority. But in 2007 Mr Boc asked Mr Hintea and his colleagues to put together a municipal strategy. It gave priority to universities over factories. Now Cluj is home to 1,350 IT companies and an estimated 20,000 developers and engineers, up from 12,000 in 2014.

Yet after five years of spectacular growth, Cluj is hitting its limits. One-fifth of Romania’s working-age population is abroad. Cluj, too, is facing labour shortages and escalating wage demands. Wouter Reijers, a Dutch businessman, says he pays his engineers double what he did five years ago. Native construction workers are so scarce that Vietnamese ones are needed to staff the city’s building sites.

Cluj’s IT companies need to start developing their own products rather than picking up outsourcing work from elsewhere, says Diana Rusu, who runs Spherik, an IT business accelerator. Companies are “fighting like mad” to buy the best talent, says Paul Brie, a Romanian who emigrated to France but returned to Cluj in 2014 for an attractive job at an IT company.