Assessing Competitiveness In Moldova's Economy - Economic Growth

Development Alternatives, Inc. / BIZPRO Moldova Moldova Competitiveness Assessment
segments of the economy that are fading, and are therefore losing market share, even when
markets are growing in the aggregate. In contrast, Moldova’s exporters to the EU have little
choice but to adapt to capitalist market architectures, and find the best opportunities for market
entry and growth. Thus, Moldova’s export competitiveness depends to a large extent on the
readiness to adapt to the architecture of growing markets.
From a strategic point of view, the analysis of trading patterns focuses attention on several
commodity groups that define clusters of interest. The priority commodity groups include
apparel; leather and leather goods, including footwear; processed fruit products; and nuts. The
following clusters were therefore selected for further analysis:
Wine and spirits;
Agribusiness, especially fruit and nuts, both fresh and processed; 3 and
Light industry, in particular skins, leather and leather goods, including footwear and apparel.
In addition, the analysis also considered services clusters that are not covered by the merchandise
trade statistics. Information and communication technology, in particular, was found to merit
further on-the-ground analysis, both as an export cluster in its own right, and as an enabling
activity shaping competitiveness in other clusters.
Important, but Challenged
WINE
Wine and related (distilled) products represent Moldova’s second most important foreign
exchange earner, after workers’ remittances. It accounts for roughly one-fourth of total (gross)
merchandise exports, and for an even greater percentage in value-added terms. The share of this
sector in industrial employment is roughly 25 percent, and probably even higher if the cluster as
a whole (including bottles, labels, laboratories, and the like) is considered. Semi-dry and semisweet
wines account for 75 percent of total production, dry table wines for 10 percent, sparkling
wines for another 10 percent, and fortified wines for 5 percent. Some 93 percent of total
production is exported. In 2003, total revenues from wine exports amounted to US$195 million,
plus US$36 million for distilled products (mostly brandy). Russia is the principal market,
accounting for over 80 percent of total exports.
As with other agriculture, total wine production has declined sharply from the levels in the mid-
1980s, as illustrated in Figure 7. The total vineyard acreage has declined by over 40 percent since
the mid-1980s because of Gorbachev’s anti-alcohol policy, the fragmentation of land holdings as
3 A recent study for USAID undertaken by the Private Farmer Commercialization Program, managed by CNFA,
provides a comprehensive assessment of prospects for high-value agriculture in Moldova. The analysis here is
designed to complement, rather than duplicate. See: Moldovan high- value agriculture competitiveness study.
Chisinau, 2004.
July 2004 • Draft Page 13