Ana Sirbu – Harvard University student; CISR (internship), August 2004

Is Growth Good Enough for the Poor?

Contents:

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Introduction

What did Transition bring?

GDP Growth: Consumption is in excess. What about Investment?

We are already in an Inflationary Gap. Falling deeper?

Poverty in Moldova

Where are we? The Human Development Index (HDI)

Social assistance in conformity with need

Policy Remarks 

Abstract:

Moldova is a young European country that got lost in the middle of a complicated and excessively long transition. After having passed through three thorny stages of economic transformation: the economic crisis followed by a sharp decline; a stable depression; the dynamization of the country’s economy, it has finally attained the revival of economic growth. Oddly enough, this growth did not lead to the contraction of the poverty zone in Moldova. Stimulated by an unusually high demand, Moldova fell in a rather deep Inflationary Gap. There is a lack of confidence in the business market as well as the banks of this country, and the short-term investment perspectives are very low. The trade deficit is augmenting and the Human Development Index signals that urgent measures need to be taken. There are certain endeavors to alleviate the poverty situation of Moldova, but they have not yet proved to be successful. This paper attempts to analyze the current situation of this republic from the perspectives exposed above as well as gives explanations and possible solutions that could contribute to the positive evolution of Moldova.