Speaking with fDi in 2011, a London-based Moldovan diplomat lamented that most people, if they know anything at all about Moldova, know one hardly flattering thing. “When I say Moldova, people immediately say: oh, the poorest country in Europe,” he said. “It hurts. We do not want to be poor, of course. No one wants to. And we definitely do not want to have our country known for that.” 

Judging by the World Bank’s Doing Business rankings, the country has done all the right things since that conversation took place. In 2011, Moldova ranked 90th worldwide for ease of doing business, and by 2016 it had climbed to 52nd. The country is doing particularly well when it comes to registering property (21st worldwide), starting a business (26th) and getting credit (28th).

But there is still a lot to be done to increase the country’s standing among investors, according to Ana Maria Mihaescu, country manager for Moldova at the International Finance Corporation, an investment entity and part of the World Bank Group. “It is relatively easy to open a new business in Moldova. But if we look at other indicators, we see a lot of potential for further reforms,” she says. “For example, Moldova ranks 170th for dealing with construction permits and 104th for getting electricity.”

Erratic performance

Over the past few years, Moldova has made unsteady progress towards pro-business reforms. Greenfield investment monitor fDi Markets reports that the same is true for the country’s ability to attract foreign projects. After a peak of 13 projects in 2004, Moldova came close to that number in 2007 and 2011, attracting 11 projects each year. However, over that time yearly levels also fell to lows of six projects in 2012 and just three in 2015.

The country might not be a clear favourite among companies looking to expand, but Moldova’s appeal to foreign investors is clear, according to Mihai Litvinciuc, business development officer at Moldova Export and Investment Promotion Organisation. “Due to the lowest labour costs and our proximity to the EU, Moldova offers excellent sourcing opportunities in textiles, apparel, shoes and leather goods, automotive and electronic equipment manufacturing,” he says. “The big advantage of Moldova is the possibility of low-volume orders of tailor-made products, with fast reaction times for EU customers and reduced delivery times.”

That may be so, but thus far Moldova, with its uneven reforms, is failing to appeal not only to foreign investors, but also to its own residents. Since early 2015, Moldova has seen political unrest that at one point gathered as many as 100,000 protesters. Moldavians took to the streets disillusioned by a range of issues including a massive banking fraud, which involved the country’s three largest banks and saw $1bn disappear. Since the parliamentary election in late 2014, the country has already seen three cabinets in power.

Moldova is anything but stable, except in one respect: with annual GDP per capita estimated by IMF at $2232, it remains the poorest country in Europe.