Strategy for Development Brief

  • Strategy for Development – general view


Republic of Moldova – a new state, a small open economy

According to its economic potential (GDP, population, territory), Republic of Moldova is one of the small countries of Europe. Being a new state, since the beginning of the 90’s, Moldova has been going through the phase of its statehood affirmation in terms of legal, institutional, and social economic aspects. The geopolitical position of Moldova – at the crossroads of the developed region of the Central Europe, traditionally mobile Balkans and huge territories of the CIS countries, its location between Romania and the Ukraine – two counties with large domestic markets – predetermine the geo-economic orientation of the country. Most optimal model for the Republic of Moldova is an open and competitive economy attractive for collaboration.

Unity of actions

Overcoming the crisis and self-affirmation of the Republic of Moldova is based on the consolidation of actions, focused on the national idea

Overcoming of the political, economic and moral crisis and consolidation of the country competitiveness, transition to the "open economy" model should be insured by focused actions of the Presidency, Parliament and Government, public organizations, supported by the public at large, in those 10 priority fields:

  • law and its supremacy;
  • institutional modifications within the structure of the state;
  • active foreign policy with respect to the integration into European and international structures;
  • priority of domestic policy – human resources development (education, health care, research & development, informatization, study of foreign languages);
  • affirmation of market economy and private sector – financial, real estate, stock and labor markets;
  • financial stability – monetary, fiscal and investment policies, that foster the economic growth;
  • structural reforms of the real economy branches, to the favor of export oriented branches and those that use high quality labor force; the sector of growth – small and middle enterprise;
  • infrastructure modernization – telecommunications, roads, transports, water and energy supply systems;
  • social reforms – enhancing the population welfare and urging the social sphere development, inclusive tourism;
  • regional policy – local self-administration, Euroregions, free economic zones, technological parks, interstate cooperation.

The strategy must be realized under the aegis of the consolidation idea, which unifies the population (civic idea, national idea) – assertion of the Republic of Moldova as a state, modernization of economy, civic accord based on the historic destines and century-old traditions of living together, transformation of the country into a civilized state – politically stable, neutral, open to international cooperation.

Scenarios, stages, implementation mechanisms

Dilemma of the nearest perspective: inertial development or radical reforms

There are two most probable scenarios – either the inertial one, which means keeping the pace and tendencies of 1995-1997 period, of the weak state structures by enhancing the security of the country against external and internal threats on the economy; or, the reforming one – based on structural reforms implemented with significant results, typical to market economy, and on the role of the state as coordinator of reforms. First scenario – the way to economic stagnation and failure of the state; the second – the way to Europe.

The stages of the latter are as follows: 1998-2000 – overcoming the crisis (both political, social economic and moral). Restoration of the territorial integrity of the country (Transnistria). By the year of 2000, as compared with 1997, a GDP growth forecast is by 1.2 times, growth of the earnings share by 25%, of direct investments into the economy – up to $600-$800m, including FDI – up to $445m; share of private sector – not less than 50%. Completion of ownership reform. Land reform. Diminution of shadow economy share up to 25-30% of the GDP, fighting crime. Restructuring a core group of 200-250 industrial enterprises and up to 500 farms. Social sphere reform – education, health care, pensioning system, research & development. Enhancing the population incomes by 20-25%, keeping the inflation rate below 8% per annum, during 1999-2000.

2000-2005 – sustainable development at a pace of 4-5% GDP growth. By the year of 2005, a GDP growth is envisioned of 1.4 times, compared with 1997, and a growth of population incomes by 40%. The annual rate of inflation should be under 6%. Overall completion of structural modifications in the economy and obtaining a more progressive structure of the GDP: industry accounting for 35%, agriculture – for 20-25% and services rendered – for 40-45%. Promotion of policy of saving energy resources, curtailing the share of costs on energy resources to 30%. Diminution of country’s dependence on external energy resources. Adjusting to free trade with European Union countries. Approaching to organization of education, health care, products and services quality standards, as well as those regarding legislation.

After 2005 – approaching the legal, social and economic parameters of the Republic of Moldova to those of the European Union in compliance with the established procedures (really within a period of not less than 10 years), while preserving traditional links with CIS countries and seeking for new forms of international collaboration based on open economy status.

A more in-depth approach towards the legal, economic and institutional mechanisms of Strategy realization – which should be performed to the benefit of the population of the country at any of the indicated stages, as stipulated by the Constitution of the Republic of Moldova, of the actions of the President, Parliament and Government, based on the inter-state agreements and international obligations of Moldova.