Moldova Trade Study Overview Ruslan Piontkivsky Chisinau Moldova
- Slides: 8
Moldova Trade Study: Overview Ruslan Piontkivsky Chisinau, Moldova February, 29 th 2016
Moldova Trade Study comprises four notes 1. Analysis of Trade Competitiveness 2. Is the DCFTA Good for Moldova? Analysis of Moldova’s Trade Policy Options 3. Competitiveness in Moldova’s Agricultural Sector 4. The Performance of Free Economic Zones in Moldova
Why these four notes? 1. Analysis of Trade Competitiveness ØCore diagnostics, based on Trade Competitiveness Diagnostics Toolkit of the WB 2. Is the DCFTA Good for Moldova? Analysis of Moldova’s Trade Policy Options ØMost important medium-term trade policy challenge 3. Competitiveness in Moldova’s Agricultural Sector ØAgro-food is the largest export item, also key for employment, poverty and GDP volatility 4. The Performance of Free Economic Zones in Moldova ØKey factor explaining recent trade dynamics
Key Message across notes: ØMajor obstacles for export-driven growth are at home, so more dynamic expansion of exports depends on reforms within Moldova
Exports growth lagged behind regional comparators, as trading costs, including provision of backbone services and ‘corruption tax’ are high Merchandise Exports Performance, 2000 -2013 Productivity Losses Associated with Corruption 1000 Bribes courts 900 -0, 01 800 700 -0, 02 -0, 03 500 400 -0, 04 300 200 -0, 05 100 -0, 06 Moldova Belarus Ukraine Albania Slovakia Hungary 201 3 201 2 201 1 201 0 200 9 200 8 200 7 200 6 200 5 200 4 200 3 200 2 200 1 0 2000=100 600 -0, 07 Bribes customs Corruption perceptions
DCFTA seems superior to other trade policy options, but the largest benefits could come from trade facilitation and investment attraction, not from the tariffs reduction per se GDP Impact of Trade Policy Options Relative to Baseline, in p. p. Decomposition of DCFTA Gains, in p. p. of GDP
Key to maximizing gains from the DCFTA with the EU is to enhance Moldova’s agricultural competitiveness to ensure access of its agro-food products to the EU market • enhancing production processes by using fertilizers and pesticides appropriately; • increasing quality through improving harvest and post-harvest processes and infrastructure; • supporting producers’ learning and understanding of product characteristics demanded in end markets; and • supporting organic farming as a way to differentiate products and compete in high-value added market segments.
Some FEZs recorded strong static gains, but have not contributed to dynamic spillovers so far Recommendations for development of the zones: Recommendations for the rest of the economy: • Downgrade fiscal incentives and shift to targeted service delivery • More power to the regulator and resident appointed administrator • One-stop-shop mechanisms for all necessary approvals and licenses • Monitoring and assessment mechanism of incentives • Integrate and replicate best practices observed in the zones • Develop technical and support services to encourage clustering and networking • Extend the privileges and the concept of the Authorized Economic Operator
