Moldova - After the Global Crisis : Promoting Competitiveness and Shared Growth

Abstract

This report argues that in the future
 Moldova will need to develop a second engine of growth from
 exports of goods and services. We argue that Moldova needs
 to resurrect agro-based exports, to raise their value by
 exporting to higher value markets, and develop service
 exports in order to provide job opportunities for
 underemployed tertiary graduates. To be successful in doing
 so, the government will need to implement deep fiscal and
 structural reforms to break the cycle, while taking
 advantage of productivity gains. Much needs fixing, and
 Moldova's public sector does not have the capacity to
 fix it all. Moldova's leaders need to reach consensus
 on a comprehensive and sequenced growth and poverty
 reduction strategy. This report sketches out what such a
 strategy should contain. The author suggests that geography
 and the Government's policy stance fundamentally shape
 Moldova's economic growth potential and the path and
 priorities that a growth strategy should follow. Government
 needs to accelerate reforms so that the country can emerge
 from the global crisis-induced recession with faster and
 less vulnerable growth. Business as usual will not suffice.
 The world's capital markets have become tighter,
 foreign investors more demanding, and export markets more
 competitive. In April 2009, Moldova's youth indicated
 that that they can no longer stand aside and watch Moldova
 fall behind, they have called for a politics of aspiration,
 and they will demand economic policies consistent with these aspirations.