Author: Mihaela Sirițanu
Policy Briefing
The Republic of Moldova stands at a decisive moment: the EU accession process and European support of approximately €1.9 billion represent a historic opportunity for economic transformation. However, without credible structural reforms, a coherent industrial policy, real growth mechanisms for Small and Medium Entreprises (SMEs), and a financial architecture capable of mobilising long-term capital, this support risks being absorbed slowly and producing limited effects on economic convergence.
This challenge is amplified by the current state of the economy. After several years marked by successive shocks – pandemic, energy crisis, drought – Moldova’s economy has recovered modestly, with growth of approximately 2.3% in 2026, but momentum is slowing. These figures indicate fragile stabilisation, not a solid recovery. At the same time, inflation, though declining from the extreme levels of 2022, remains at around 5-7%, and investment continues to fall short of what is needed to sustain accelerated convergence. Economic growth is driven primarily by consumption and external financing, while exports remain weak, limiting long-term development potential.
In this context, Moldova’s problem is not a lack of objectives or external support, but the absence of a sufficiently solid economic and institutional foundation to turn this opportunity into a genuine convergence process. Although the Government has announced ambitious targets regarding investment, SMEs, and European convergence, the current economic model does not yet provide the foundation for sustainable transformation. Three structural bottlenecks are decisive:
- The Absence of a Coherent Industrial Policy
The Republic of Moldova still lacks a coherent industrial policy capable of directing economic development towards high-value-added sectors. Although the National Industrial Development Programme 2024-2028 identifies priority areas such as electronics, automotive, and agro-processing, these directions are not consistently translated into implementation tools and targeted budget allocations. The structure of the economy confirms this gap: the manufacturing sector accounts for only approximately 7.4% of GDP (2025), while services dominate at over 60% of GDP, but are concentrated in low-productivity activities. Moreover, Moldova invests significantly below the EU average in research and development, and European Innovation Scoreboard scores indicate a limited capacity for innovation and technological absorption.
This lack of coherence is also reflected in the existing instruments, which remain fragmented and without systemic effect. Industrial parks and free economic zones, promoted as pillars of industrialisation, often operate below capacity, many being partially utilised or not integrated into the local economy. These zones tend to operate as enclaves, with limited links to local suppliers, while European Commission assessments highlight that they have not attracted significant investment in advanced industries and are dominated by low-value-added activities such as trade and logistics. Without an integrated industrial strategy – one that connects public investment, SME support, technical education, and investment attraction – the economy risks remaining stuck in the lower segments of value chains, with limited growth and European convergence potential.
- An SME Ecosystem Dominated by Fragile Microenterprises
The structure of Moldova’s SME sector reveals a deep imbalance between the number of firms and their real economic capacity. At the end of 2023, there were approximately 63,700 active economic operators, of which around 88% were microenterprises (with up to 9 employees). At the same time, large enterprises represent only 0.8% of total firms, but generate approximately 55% of total sales volume and around 35% of employment. This distribution points to a polarised economy in which most firms are small, undercapitalised, and oriented towards the domestic market, with low productivity and limited capacity for investment and export. Unlike the EU structure, where SMEs include a consistent segment of small and medium-sized firms capable of scaling, in Moldova the layer of “growth firms” remains very thin.
In this context, public policies have not yet succeeded in correcting this structural vulnerability. Support programmes, particularly those managed by the Organisation for SME Development (ODA), are fragmented and predominantly oriented towards small grants distributed to a large number of beneficiaries, without a clear differentiation by firms’ stages of development. The average grant of approximately €20,000 is insufficient for technological modernisation, innovation, or expansion into external markets, and selection criteria are rarely linked to productivity, exports, or integration into value chains. Without dedicated instruments for firms with scaling potential – larger grants, co-financing, performance-based conditionality – public support risks maintaining an ecosystem of grant-dependent microenterprises rather than stimulating the emergence of a core of competitive, export-oriented SMEs.
III. Limited Access to Capital and the Absence of Long-Term Financing
Access to capital remains one of the main structural constraints of Moldova’s economy and explains the low level of investment. In 2024–2025, total investment is estimated at only 20-22% of GDP, significantly below the level required for convergence with EU economies (30-35% of GDP). The financial system is dominated by the banking sector, which concentrates approximately 90% of financial assets, while the capital market is virtually non-existent. At the same time, only around 38% of firms have access to loans or credit lines, meaning that most companies cannot finance investment through formal sources. Even where credit exists, it is directed mainly towards short-term financing for working capital and trade, rather than long-term productive investment.
This structure reflects a systemic weakness in the economy: the absence of internal mechanisms for long-term capital accumulation and mobilisation. The Republic of Moldova still lacks functioning institutional investors, such as pension funds or life insurance products with an investment component, and the financial market remains underdeveloped and fragmented. Foreign capital is volatile and concentrated in low-value-added sectors, while firms’ capacity to generate and reinvest profit is limited. Under these conditions, the economy remains dependent on external financing and short-term bank credit, significantly restricting the ability to sustain productive investment, industrial modernisation, and sustainable economic growth.
A Cross-Cutting Constraint: Administrative Capacity
The state’s capacity to implement these transformations remains limited. In particular, the new public procurement planning regulation formally aligns procedures with EU standards, but does not yet introduce sufficient mechanisms for strategic prioritisation, cost-benefit analysis, traceability of changes, and transparency based on open data. Under these conditions, efficient absorption of European funds remains uncertain, and the risks of delays, favouritism, and inefficient use of resources persist.
Recommendations for Sustainable Development
Industrial Transformation
- Industrially-oriented ODA grants (“step-up”): ODA grants must be reconfigured towards clear industrial objectives (currently 50% go to inclusion rather than industrial policies), diversified into larger grants, co-financed, and awarded in stages. Access to successive rounds of financing must be conditioned on concrete results – productivity growth, new products, exports – to support firms with real scaling potential.
- Innovation vouchers: Introduction of innovation vouchers to allow firms to access external design, engineering, testing, and prototype development services. This instrument reduces the initial costs of innovation and facilitates the transition from subcontracting to developing own higher-value-added products.
- Specialisation and modernisation of industrial parks: Industrial parks must have explicit economic profiles, with targeted investment in sectoral infrastructure and investor services. They must be functionally connected with universities, technical colleges, and innovation centres, and aligned with European funding, to become integrated industrial development platforms.
- Sector-oriented dual education programmes: Dual education must be expanded and adapted to the needs of priority sectors (agro-processing, electronics, renewable energy), through direct collaboration with companies in industrial parks. The aim is to build industry-relevant skills and reduce the skilled labour shortage.
From Microenterprises to Competitive SMEs
- Repositioning incubators as scaling platforms: Incubators must be transformed from hosting spaces into active growth platforms, with clear selection criteria (scaling potential, membership in priority sectors), performance objectives (turnover, new products, commercial contracts), and limited duration. Access must be conditioned on development plans, and success measured by concrete outcomes.
- Restructuring ODA grants by development stage: Grants must be organised according to firms’ lifecycle stages (start-up, growth, internationalisation), with differentiated instruments for each phase. Financing must be more concentrated, co-financed, and oriented towards firms with scaling potential, rather than dispersed in small grants with no structural impact.
- Supplier development programmes: Development of programmes through which SMEs are selected, assessed, and supported to become suppliers to large companies or existing investors. These must include technical audits, standardisation and certification support, and pilot contracts for gradual integration into supply chains.
- Functional matchmaking platforms: Active mechanisms must be created to connect SMEs with real demand in the economy – large companies, exporters, investors, and public projects. These platforms must function as economic intermediation tools, based on concrete demand and real contracting opportunities.
- Integration of supplier development with active matchmaking: Supplier development programmes must be combined with assisted matchmaking, so that prepared SMEs are directly connected to commercial opportunities, with a focus on facilitating first contracts and effective integration into value chains.
Capital Mobilisation for Economic Development
- Public–private investment fund: Creation of an investment fund with independent governance to co-invest in projects in strategic sectors (energy, agro-processing, industry), acting as a catalyst for attracting private capital and reducing the initial risk of investments.
- Banks as anchor investors: Introduction of a limited role for banks as initial investors in corporate or project bond issuances, to support capital market development and build confidence and liquidity at the early stage.
- Development of pension funds and institutional capital: Introduction of tax incentives for employee and employer contributions, together with auto-enrolment mechanisms, to create a stable long-term savings base and support the emergence of institutional investors.
- Clarification of the investment framework for funds: Establishment of clear rules on investment policies, risk limits, and eligible assets for pension funds and other investment vehicles, to enable efficient mobilisation of domestic capital.
- Modernisation of capital market infrastructure: Full digitalisation of processes, introduction of straight-through processing, and integration with settlement and custody systems in Romania, to reduce costs and increase market liquidity.
- Adapted access for SMEs (SME Growth Markets): Creation of a dedicated market segment for SMEs, with proportionate rules: simplified documentation, reduced reporting requirements, and lower listing costs, to facilitate access for small and medium-sized enterprises to capital market financing.