[ - Is the 16th Anniversary of independence somehow distinct from other anniversaries?] Today’s Moldova is like a teenager: weak, spoiled and, at the same time, easily influenced, with no clear view what to do with her life. But let’s not forget: sixteen is the age when the person becomes fully responsible for her deeds. By analogy, I would say that, from now on, we cannot use our short history of statehood as an excuse for our mistakes. If we want to get rid of the image of a confused teenager, it is time to speak to the rest of the world on equal terms, and not looking up both to the West and East, as it is happening today. It is time to formulate and argue clearly our positions and actions, to base public policies on economic analysis instead of the whim or private interests of politicians. Finally, it is time to clearly state where we want to end up in the long run. [ - How do you think, what are Moldova’s biggest achievements and failures during these 16 years of its independence?] I think the greatest achievement is the fact that the economy has managed, broadly speaking, to transition to a market economy. The main candidate in the failures department is Transnistria. However, the solution to this problem is not is the sole hands of Chisinau, so it would be unfair to put all the blame for the current situation of Moldova. Therefore, I think that the main failure is linked to our main achievement: the transition to a market economy is incomplete, the dynamics of structural reforms registering a deceleration over the last years. Here we can no longer blame any external forces – this failure is a purely internal one. [ - Why do you think Moldova managed to be ranked as the poorest state in Europe, with a recent survey by the U.S. magazine “Foreign Policy” showing Moldova on its Independence Anniversary’s eve as the least stable country in Europe? When and how it will be able to get rid of these tags?] Why some countries are poor and volatile and how they can escape the current situation are questions that are on the mind of the brightest economists and political scientists. Any attempt, however detailed, to provide an answer to these questions in the case of Moldova is, by definition, incomplete. I will sketch just a couple of issues, primarily of economic origins, that are relevant. I would start explaining Moldova’s economic collapse by objective factors, that couldn’t have been addressed even by the most apt government. For example, as one of the smallest republics of the former USSR, Moldova depended disproportionally on outside markets and suppliers. The fall down of the Soviet Union and the breakage – even the temporary one – of traditional economic ties has initially affected smaller republics (including the Baltics) to a greater extent than the large ones. Clearly, the subsequent divergence between the trajectories of Moldova and the Baltics can no longer be explained by invoking the size of the countries. I would stress the dilettantism of the first governments, further aggravated by a lack of a statesmen thinking traditions (not surprising, given than we have little statehood traditions). After all, it is not surprising that the power has been seized by communists, who relied on their administrative and organizational experience accumulated during the soviet era. However, they lack the political will (and, possibly, the desire) to implement unpopular, but highly necessary, structural reforms. How can we escape the labels “poorest” and “most instable”? My answer will be most unoriginal – through economic growth. Of course, such an answer only raises new questions: what are the main constraints to growth and how can we remove them? Is it lack of human capital? Deteriorated infrastructure? Corruption? Inflation? Lack of innovation? An inefficient banking sector? There are many potential explanations for low growth rates. Recently, I have participated in an economic study that was called to identify Moldova’s binding (most stringent) constraints to growth. One of the problems emphasized by our results was the over-regulated business environment. I would extend this conclusions even further: Moldova’s economy suffers from over-interference by the state. Sustainable economic growth requires an efficient allocation of resources: consumption vs. investment, industry vs. agriculture vs. services, sectors producing non-tradable goods (construction, infrastructure, etc.) vs. sectors producing tradable goods, investment in own R&D projects vs. purchase of foreign technologies. This efficient allocation is, most often, intermediated by the price mechanism, which serves as an indicator of the relative scarcity of various goods, services and factors of production. Any price distortion – through agricultural subsidies, tax breaks for certain industries and categories of citizens, licenses – lower the efficiency of resource allocation. There is an array of situations where the market mechanism fails, and it is these situations that serve as motivation for the state’s intervention into a market economy. However, in today’s Moldova, the state’s intervention is rarely determined by the desire to correct certain market failures. Market distortions (regulations, subsidies, licenses, taxes, etc.) are viewed as a panacea to every economic and social problem. The state is often blamed for not certain things, and it is rarely questioned whether the state is doing (or breaking) too much through its interventions. I am not advocating for the complete withdrawal of the state from the economy. However, it is time to analyze policies through the prism of economic efficiency, leaving populism aside. Clearly, such an approach to policy formulation and analysis requires modern economic training on the part of public officials and politicians. I would therefore underline the need for a new generation of policymakers. We need well-educated people, with experience outside the public sector, people who can talk on an equal foot both with the East and the West (and I’m not referring to knowledge of foreign languages alone, but to the understanding of Eastern and Western psychologies), people who have the will to stay away from populist policies. Such people already do exist, including in the government, but their number is insignificant. I would like to turn to Chile’s experience. During Pinochet’s time, a comprehensive packet of economic liberalization reforms has been introduced and implemented by a group of young economists trained at the University of Chicago. The success of the reforms by no means justifies Pinochet’s atrocities, but proves that an unfavorable political situation is not necessarily associated with economic stagnation. Economic growth spurred by the reforms has facilitated a fairly calm transition to a democratic regime, while Chile (with a GDP per capita higher than those of Russia and Romania) is viewed as important innovator in the area of public policies and institutions. I intentionally mention Chile, a country which is located, from our point of view, at the other end of the world. In Moldova, the discussion of any problem usually invokes experiences of our neighbors: Eastern Europe and some ex-soviet republics. However, the world is much greater than that and, in some areas (size, income, migration, importance of agriculture), Moldova is closer to the Dominican Republic, El Salvador and Honduras than to Romania and Ukraine. It is time we start learning from the successes and failures from around the world, not only those of our neighbors. Otherwise we risk wasting time reinventing the wheel and repeating well-documented mistakes. [ - Do you think that the European integration as a strategic goal of independent Moldova is irreversible?] I am not an expert in the field European integration, but your question surprises me. Are there really people out there who can imagine alternative strategic objectives? But, who knows – maybe I just have a poor imagination… [ - A year after changing the name of the national holiday from Independence Day into Republic’s Day, do you think that the change was reasonable?] I wasn’t even know of this modification. The national holiday in the US is called Independence Day, in Italy – Republic Day. Let’s view this change as a move towards Moldova’s “Europeanization”. However, I would prefer that the Europeanization happens on more important directions than the change the name of a day in the calendar. [Note:] Alexander maintains a popular blog (www.culiuc.com), where he writes on Moldova’s economy, governance, international relations and education.