Professional Documents
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Objectives
Dynamics of FDI in the Republic of Moldova. The obstacles met by the Republic of Moldova in attracting FDI. What are the solutions?
Advantages that the direct foreign investments offer: Access to new technologies ; New jobs ; Development of new economic sectors ; Development of human capital ; Support to local companies to access new export markets ;
At the beginning of the 90s, Republic of Moldova had to face new economic conditions Lack of natural resources; No Foreign Investment; No development;
Stock of FDI
Estonia Croatia Latvia
Lithuania
Bulgaria Kazakhstan Romania Azerbaijan Russia Bosnia and Herzegovina Macedonia, TFYR Serbia and Montenegro Georgia Turkmenistan Armenia Ucraine Albania Republic of Moldova Belarus Kyrgyzstan
Tajikistan
Uzbekistan 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000
FDI Inflows(net)
300
250
200
Enter of Lukoil
Mil. USD
150
100
50
0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
II
Italy 7.9
5.9
Spain
Great Britain Germany USA Romania France Ukraine
4.9
0.3
19.6
Agriculture
Other Activities
SWOT
analyzes for attracting FDI
Strengths
Neighboring with EU; Favorable climate conditions; Bilingual business environment (Romanian and Russian); Well developed banking system; Favorable geographical location of the country; Cheap labor force; The existence of trade preferences offered by European Union;
Weaknesses
Macroeconomic instability, high inflation rate; Poor infrastructure; Lack of natural resources; High energy import dependence; Influence of external factors on national economy; Raising deficit of skilled labor force; Lack of transparency and bureaucracy; Low development of scientific and technological economic sectors; Insufficient development of consulting and information services for attracting investment and export promotion;
Opportunities
State policy oriented towards European integration; High level of consumption; Selling government property using various means, including public-private partnership; De-capitalized assets which have a development potential, including infrastructure; Conditions for developing a new financial institutions and instruments;
Threats
Presence of administrative obstacles for attracting of investments; High regional competition for attracting investments; High labor migration mobility in the region; Reduced state capacities in financing investments in infrastructure; Lack of domestic resources for investments; Growing prices for energy resources;
Recommendations
Create a clear concept referring to the role of foreign investments for the Republic of Moldova; Define and approve the economic fields which require investments; Create a competitive environment with the participation of foreign investors; Elaborate a viable legal database and assure a trustful and transparent legal system and mechanism for enforcing this legislation; Invest in infrastructure.; Evaluate the policies for attracting FDI, which constitutes a solution for a long term success in attracting foreign investments;