Assessing Competitiveness In Moldova's Economy - Economic Growth
Assessing Competitiveness In Moldova's Economy - Economic Growth
Assessing Competitiveness In Moldova's Economy - Economic Growth
You also want an ePaper? Increase the reach of your titles
YUMPU automatically turns print PDFs into web optimized ePapers that Google loves.
Development Alternatives, <strong>In</strong>c. / BIZPRO Moldova Moldova <strong>Competitiveness</strong> Assessment<br />
Cooperation among entrepreneurs and enterprise managers in related or competing activities<br />
tends to be low, not unusual for a low-trust environment with a government disposed towards<br />
excessive levels of surveillance and interference. Lack of trust has been a major factor in<br />
bringing structural reform to a virtual standstill. At the same time however, there are informal<br />
support arrangements among complementors, and even competitors, with respect to joint<br />
sourcing of inputs, flexible payment terms, or joint marketing (such as a single showroom for<br />
shoes from competing manufacturers).<br />
Demand Conditions<br />
Figure 1 shows that Moldova lags most in terms of market opportunities. A small population and low<br />
incomes limit the size and sophistication of the local market. However, domestic markets cannot<br />
be written off, as they remain the principal target for a good portion of the country’s small and<br />
medium-sized enterprise sector. Moreover, as competition and incomes increase, these markets<br />
will become increasingly important. At present, the flow of workers’ remittances from abroad is<br />
largely responsible for fueling a surge in demand that is boosting growth (even if much of the<br />
demand is going to imports) in particular construction materials for the rehabilitation and<br />
renovation of the country’s aging housing stock, or new construction.<br />
As a small open economy <strong>Moldova's</strong> export markets to the east and west, as well<br />
as overseas, will continue to be major targets. Currently (2003), 45 percent of Moldova’s exports<br />
go to Russia and Ukraine, and 39 percent to the countries of the EU 25; Romania accounts for<br />
another 8 percent, as illustrated in Figure 3. (Prior to the ruble crisis of 1998, two-thirds of<br />
Moldova’s exports went to Russia and Ukraine, and only 17 percent to the EU.) The forces<br />
shaping trends and shifts in these two main markets thus matter most from a strategic point<br />
of view.<br />
Figure 3: Moldova’s 2003 exports by importing country<br />
July 2004 • Draft Page 6
Change language