The Moldovan Business Environment: Theoretical and Empirical Survey

Abstract

Moldova is a relatively small, landlocked country with few natural resources apart from its agricultural land. Over the last years, the contribution of SMEs was a little bit lower than 30% of the national GDP. This modest contribution corroborated the relative weight of SMEs in turnover and employment, which has decreased since 2010.

In June 2014, Moldova signed the Association Agreement with the European Union, including Deep and Comprehensive Free Trade Area (DCFTA). This AA represents for Moldova an ambitious roadmap for policy reform, including in the area of SME development. Moldova made considerable progress in developing a comprehensive institutional framework for the SME sector. Nevertheless, Moldova’s business environment remains sensible to the volatile macroeconomic environment, structural challenges in the financial sector, crisis in the banking sector, internal political instability and regional geopolitical instability.

In order to foster SME competitiveness and reap the benefits of new trading opportunities with the EU, the government needs to address the remaining challenges confronting SMEs.

The aim of this chapter is to analyze the business environment in Moldova in terms of the existing regulatory framework, identifying barriers and constraints, and analysis of programs and policies to strengthen it, along with synthesizing and developing recommendations to foster the business environment. We will also focus on technology business incubators in the final section.

Keywords: SMEs; regulatory framework; constraints; strategies; incubators