Economist Calin Corjan: Because of “shadow economy” the state is forced to increase the burden on legal sector

The scales of shadow economy commented the economist Calin Corjan, stating that such a phenomenon cannot but cause concern.

According to data of independent analytical centre “Expert-Grup”, in Moldova for 2013 the share of shadow economy in GDP constituted 28%. This state of affairs will affect negatively the competitiveness of some economic agents, and may also lead to decrease of productivity index in the domain of labour.

Analytical centre affirms that the highest level of informal employment is observed in agricultural sector – 66.4%, in construction – 12.6%, and also in public sector – 0.1%.

The scales of shadow economy commented the economist Calin Corjan, stating that such a phenomenon cannot but cause concern.

“The shadow economy leads to decrease of state budget revenues. What happens then? The state is forced to increase the burden on legal sector, and this leads to vicious circle: going away to shadow – increase of tax burden – even greater going away in shadow”, – concluded Calin Corjan.

It is important for Moldova to maintain economic relations with both the East and the West – Calin Corjan >>>

Expert-Grup is a think-tank specialized in economic and public policy research. As an independent organization, Expert-Grup reflects the ideals of young intellectuals from Moldova, who set up the institution with the purpose of contributing to the country’s development. We are positioning ourselves as a politically and ideologically neutral think-tank, and we do not represent any economic, corporate and political interests. Expert-Grup was established in 1998 and started the research activity in 2006.

The mission of the organization is to promote the public interest and to develop efficient and innovative solutions for the development of the Republic of Moldova.
In order to fulfil this mission, Expert-Grup provides the necessary creative and institutional environment, encouraging expression of free and non-trivial thinking, which makes us a leading source of unbiased economic analysis.

Direct foreign investments in the economy of the Republic of Moldova

After the proclamation of the independence of the republic and the beginning of economic reforms in order to ensure the transition to markets, the economy and government began to pay special attention to attracting investment in the country’s economy. The legislative basis for this was the Law on Foreign Investments. It was adopted by Parliament in 1992. Later, in 2004, the Law on Investments in Entrepreneurship was adopted.

Over the past ten years, the government has taken steps to attract direct investment in the economy of the republic. Due to this, in the last decade foreign direct investments in the economy of Moldova, including in absolute volume, and in the specific weight in the domestic gross product. In 2009, foreign direct investment accounted for about 1.6% of Moldova’s GDP.

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Foreign investments: the situation in Moldova

Since 2013, Moldova has experienced a decline in net inflow of foreign investment. What are the reasons? How many enterprises with foreign capital are working on the territory of our country today, and who are the main foreign investors?
Official data of the National Bank of Moldova shows that in January-September 2016, the net inflow of foreign direct investment (FDI) into the Moldovan economy decreased by 41.3% compared to the same period in 2015 to $ 112.33 million.

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