2021 Index of Economic Freedom

Moldova

OVERALL SCORE62.5
WORLD RANK85
Rule of Law

Property Rights60.6

Judicial Effectiveness29.9

Government Integrity38.7

Government Size

Tax Burden94.0

Government Spending71.0

Fiscal Health96.5

Regulatory Efficiency

Business Freedom66.2

Labor Freedom39.2

Monetary Freedom71.5

Open Markets

Trade Freedom76.8

Investment Freedom55.0

Financial Freedom50.0

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Quick Facts
  • Population:
    • 2.7 million
  • GDP (PPP):
    • $27.3 billion
    • 3.6% growth
    • 3.3% 5-year compound annual growth
    • $13,574 per capita
  • Unemployment:
    • 5.5%
  • Inflation (CPI):
    • 4.8%
  • FDI Inflow:
    • $588.6 million

Moldova’s economic freedom score is 62.5, making its economy the 85th freest in the 2021 Index. Its overall score has increased by 0.5 point, primarily because of an improvement in the tax burden score. Moldova is ranked 41st among 45 countries in the Europe region, and its overall score is below the regional average but above the world average.

The Moldovan economy remains in the moderately free category this year. Economic freedom is constrained by post-Soviet Moldova’s ongoing vulnerability to corruption, political uncertainty, weak administrative capacity, vested bureaucratic interests, a rigid labor code, and dependence on energy imports. The rule of law in particular remains very weak, especially in the judicial system.

IMPACT OF COVID-19: As of December 1, 2020, 2,323 deaths had been attributed to the pandemic in Moldova, and the economy was forecast to contract by 4.5 percent for the year.

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Background

Moldova gained independence after the collapse of the Soviet Union in 1991 but is vulnerable to economic pressure from Russia and has to contend with a secessionist pro-Russian movement in its Transnistria region, which is currently home to about 1,000 Russian troops. The February 2019 Moldovan parliamentary elections ended with most of the vote in parliament split among three parties: the pro-Russia Socialist Party, the pro-Europe Democratic Party, and the pro-Western ACUM bloc. In November 2019, Moldova’s parliament approved a new government led by former finance minister and presidential adviser Ion Chicu. Moldova’s economy depends on emigrants’ remittances and agricultural products like fruits, vegetables, wine, and tobacco.

Rule of LawView Methodology

Property Rights 60.6 Create a Graph using this measurement

Judicial Effectiveness 29.9 Create a Graph using this measurement

Government Integrity 38.7 Create a Graph using this measurement

Moldovan law protects property rights, but they can be undermined by judicial corruption. Ownership titles are registered by a national cadastral office. The judiciary is constitutionally independent. Reforms are underway to improve the legal framework and reorganize and streamline the operations of the courts, which have been subject to political pressure. Organized crime and corruption remain major problems at all levels of government.

Government SizeView Methodology

The top individual income and corporate tax rates are 12 percent. Other taxes include a value-added tax. The overall tax burden equals 17.7 percent of total domestic income. Government spending has amounted to 31.1 percent of total output (GDP) over the past three years, and budget deficits have averaged 1.1 percent of GDP. Public debt is equivalent to 27.3 percent of GDP.

Regulatory EfficiencyView Methodology

Dealing with construction permits has become quite a bit more expensive and time-consuming. It is estimated that about one-fifth of the labor force works abroad, leaving fewer seeking jobs at home and making it more difficult to expand domestic production. The government subsidizes agriculture and other sectors and maintains price controls on food and other staple goods.

Open MarketsView Methodology

Moldova has eight preferential trade agreements in force. The trade-weighted average tariff rate is 4.1 percent, and eight nontariff measures are in effect. In general, foreign and domestic investors are treated equally under the law, but the overall investment framework lacks transparency and efficiency. Long-term financing remains difficult. About 45 percent of adult Moldovans have access to an account with a formal banking institution.

Country's Score Over Time

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Regional Ranking

RANK COUNTRY OVERALL CHANGE
1Switzerland81.9-0.1
2Ireland81.40.5
3United Kingdom78.4-0.9
4Estonia78.20.5
5Denmark77.8-0.5
6Iceland77.40.3
7Georgia77.20.1
8Lithuania76.90.2
9Netherlands76.8-0.2
10Finland76.10.4
11Luxembourg760.2
12Sweden74.7-0.2
13Austria73.90.6
14Czech Republic73.8-1.0
15Norway73.40.0
16Germany72.5-1.0
17Latvia72.30.4
18Armenia71.91.3
19Cyprus71.41.3
20Bulgaria70.40.2
21Malta70.20.7
22Belgium70.11.2
23Azerbaijan70.10.8
24Spain69.93.0
25Poland69.70.6
26Romania69.5-0.2
27North Macedonia68.6-0.9
28Slovenia68.30.5
29Portugal67.50.5
30Serbia 67.21.2
31Hungary67.20.8
32Kosovo66.5-0.9
33Slovak Republic66.3-0.5
34France65.7-0.3
35Albania65.2-1.7
36Italy64.91.1
37Turkey64-0.4
38Croatia63.61.4
39Montenegro63.41.9
40Bosnia and Herzegovina62.90.3
41Moldova62.50.5
42Russia61.50.5
43Belarus61-0.7
44Greece60.91.0
45Ukraine56.21.3
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