Moldova’s Economy

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I. Introduction: As one of the former republics of the Soviet Union, Moldova is among a group of countries in central Europe that is in the process of transitioning economy from a planned to a market economy. Over the years, Moldova has adopted free market policies that are believed to lead the country on a path of economic growth and freedom. Transition economists agree to a number of things involved in the transition process, that countries in this category must embark on, to ensure full transition to a market economy. This process calls forth a drastic restructuring of institutions. As such, Ukraine has adopted policies aimed at this goal. Despite such progressive efforts, the rate of growth has been disappointing compared to that of…show more content…
This does not seem to agree with the most recent data. There were also certain expectations that remain and show in many developing countries; these include the advantages of the law of larger numbers and that of marginal productivity of capital, which tends to be higher in developing countries. This is considering its original absence or inadequacy. Capital was thus expected to flow from rich to poor countries since it seeks higher rates of return, thus convergence. Some policies Moldova can adopt if they are to successfully attract foreign savings could be the following: The country could make more efforts to liberalize the financial sector, making it more open to growth and reform rather than allow stringent cultural or other restrictions to run it with no progress. This should attract foreign investors with accordance to growth potential. Moldova’s government could engage in policies that will see increases in per capita income. As income increases, savings also increase. Evidence of increased savings and investments should serve to draw in more foreign savings. In addition, the country’s government could also pursue policies to ensure economic stability. This lowers investment and savings risk in the system. Moldova’s government could also run continuous budget surpluses to avert recession and maintain growth, which would certainly attract foreign savings. Finally, the country may also engage in policies
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