2015 Index of Economic Freedom

Moldova

overall score57.5
world rank111
Rule of Law

Property Rights40.0

Freedom From Corruption35.0

Limited Government

Government Spending51.8

Fiscal Freedom85.1

Regulatory Efficiency

Business Freedom66.8

Labor Freedom40.6

Monetary Freedom76.1

Open Markets

Trade Freedom79.8

Investment Freedom50.0

Financial Freedom50.0

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Quick Facts
  • Population:
    • 3.6 million
  • GDP (PPP):
    • $13.3 billion
    • 8.9% growth
    • 3.0% 5-year compound annual growth
    • $3,736 per capita
  • Unemployment:
    • 5.9%
  • Inflation (CPI):
    • 4.6%
  • FDI Inflow:
    • $231.3 million
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Moldova’s economic freedom score is 57.5, making its economy the 111th freest in the 2015 Index. Its score has increased by 0.2 point since last year, with gains in freedom from corruption, labor freedom, and monetary freedom outweighing declines in business freedom and the control of government spending. Moldova is ranked 39th among 43 countries in the Europe region, and its overall score is below the regional and world averages.

Reversing a previous sharp drop in economic freedom, Moldova has experienced three straight years of gains. Since 2011, Moldova has advanced its economic freedom by 1.8 points. Modest score improvements highlight a continued effort to transform the formerly Communist economy into a free-market system.

Nonetheless, the weak rule of law and a lack of progress in implementing open-market policies continue to prevent broader and more dynamic economic development. Economic performance is far below potential. Lingering state interference in the private sector increases economic risk in a volatile political environment. Political instability has left fiscal policy fragmented, and there is significant corruption in most areas of the bureaucracy.

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Background

Moldova gained independence after the collapse of the Soviet Union in 1991 but faces a secessionist pro-Russian movement in its Transnistria region. The country is poor, and excessive dependence on Russia threatens its sovereignty. In April 2013, the center-right Liberal Democrat Party (LDP) government of Prime Minister Vlad Filat lost a no-confidence vote. He was replaced by Iurie Leanca, also of the LDP, who put together a slightly different coaltion. Leanca supports European integration and favors EU candidate status for Moldova in 2015. Association Agreements signed with the EU in June 2014 include Deep and Comprehensive Free Trade Area (DCFTA) accords, and exports to the EU are increasing. Foodstuffs, wine, and agricultural products are the main exports, although the technology sector is developing slowly. Corruption undermines public trust in government.

Rule of LawView Methodology

Property Rights 40.0 Create a Graph using this measurement

Freedom From Corruption 35.0 Create a Graph using this measurement

Most Moldovans see corruption as one of the country’s major challenges. Corruption is systemic and deeply embedded in Moldova’s public institutions, especially in law enforcement, the judicial system, public service, political parties, the educational system, and the legislature. The constitution provides for an independent judiciary, but the legal framework is ineffective, and lack of funds undermines reform efforts.

Limited GovernmentView Methodology

The top individual income tax rate is 18 percent, and the top corporate tax rate is 12 percent. Other taxes include a value-added tax. The overall tax burden amounts to 32 percent of domestic income. Government expenditures are equivalent to 40.1 percent of domestic output, and public debt equals approximately 24 percent of gross domestic product.

Regulatory EfficiencyView Methodology

Bureaucracy and lack of transparency can make the formation and operation of private enterprises burdensome. The non-salary cost of employing a worker is relatively high, and restrictions on work hours are stringent. The government has increased agricultural subsidies in support of eventual EU membership. The rapid depreciation of the leu in 2014 and looser fiscal policy threaten the inflation target.

Open MarketsView Methodology

Moldova has a 2.6 percent average tariff rate. Some products are subject to import quotas. Foreign and domestic investments are generally treated equally under the law. The financial system still faces major challenges stemming from a poor regulatory environment and weak governance. The banking sector remains underdeveloped and does not offer a range of readily available financing options.

Country's Score Over Time

Bar Graph of Moldova Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing Moldova to other economic country groups Download Charts

Regional Ranking

rank country overall change
1Switzerland80.5-1.1
2Estonia76.80.9
3Ireland76.60.4
4Denmark76.30.2
5United Kingdom75.80.9
6Lithuania74.71.7
7Germany73.80.4
8The Netherlands73.7-0.5
9Finland73.40.0
10Luxembourg73.2-1.0
11Georgia730.4
12Sweden72.7-0.4
13Czech Republic72.50.3
14Iceland72-0.4
15Norway71.80.9
16Austria71.2-1.2
17Latvia69.71.0
18Belgium68.8-1.1
19Poland68.61.6
20Cyprus67.90.3
21Spain67.60.4
22Slovakia67.20.8
23Armenia67.1-1.8
24Macedonia67.1-1.5
25Hungary 66.8-0.2
26Bulgaria66.81.1
27Romania66.61.1
28Malta66.50.1
29Albania65.7-1.2
30Portugal65.31.8
31Montenegro64.71.1
32Turkey63.2-1.7
33France62.5-1.0
34Italy61.70.8
35Croatia61.51.1
36Slovenia60.3-2.4
37Serbia 600.6
38Bosnia and Herzegovina590.6
39Moldova57.50.2
40Greece54-1.7
41Russia52.10.2
42Belarus49.8-0.3
43Ukraine46.9-2.4
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