CUPRINS - Universitatea George Bacovia

Integration of the Republic of Moldova into the international trade:problems and perspectives of respecialization of Moldovan economyUnfinished privatization is the issue that impedes our transition to themarket economy. The implementation of the third privatization program wasextended for the second time in 2002 and now it will be completed by 2006. Byearly 2003 some 470 enterprises and 160 unfinished structures remain to be sold.The list includes strategically important enterprises in telecommunication, energyand agribusiness (in particular tobacco and the wineries), but mostly consists ofloss-making enterprises which are difficult to sell. Recent controversies over thepast privatization, some of which have been challenged or overturned, have alsohad repercussions for the pace of the current privatization. (2)The other impediment is the state intervention in the national economy, thespecialization was not yet determined and the sectors of the economy necessitatingto be protected were not. Government interference deters investors, despite modestimprovements in some aspects of the business environment. The government istaking an increasingly interventionist approach in the economy which has causedimportant foreign investors either to stop production or leave the countryaltogether. Some of the remaining investors have come under pressure ofgovernment regulations, tax authorities and the judiciary. High-profile clashesbetween the government and some investors have contributed to a drop in foreigndirect investment, which fell from USD 156 million in 2001 to USD 110 million in2002. However against this trend there has been some interest from Russianinvestors, while Turkish brewing company EFES took over the largest localbrewery Vitanta Intravest. According to World Bank surveys, there has been someimprovement in the business environment in 2003, including reductions ofadministrative barriers, licensing and tax administration. Administrative corruptionhas been reduced, but remains widespread. Even with these improvements,Moldovan businesses still operate under less favorable conditions than their peersin neighboring countries.There are several factors of the low competitiveness of the Moldovangoods in the foreign markets: the dependence of the exports on the CIS market andagricultural products remain dominant in export structure, low quality of goods andinsufficient efforts to discover the Moldova’s comparative advantage in the otherbrunches of economy. The current structure doesn’t correspond to its real potential.Export barriers limit economic integration. Moldova was one of the firstCIS countries to join the WTO. However trade integration has so far been limitedby a number of export restrictions imposed by either Moldova’s trading partners –for example agricultural trade barriers – or by the country itself. Moldovamaintains restrictions on the export of scrap metals, but has agreed to remove thesebarriers as part of its discussions with the IMF. Under the European Commission‘s“Wider Europe” initiative, aimed at the future EU border states, Moldova couldbenefit from increasing trade and capital flows if the momentum for reform isregained. (2)481