State intervenes excessively and groundlessly in Moldova’s economy, analytical study

The business environment in Moldova is filled to capacity, while the state intervention in economy is not always justified and as a result the public money is wasted, says the study “100 most pressing Moldova’s issues in 2007” presented on January 15. The authors classed this problem as one of the ten most serious ones by intensity experienced in 2007, Info-Prim Neo reports. Experts say the state intervention in economy must be determined by the wish to counterbalance certain failures of the market mechanism. In Moldova yet, the state intervention is first of all motivated by populism, interests, fiscal or legal advantages for the own businesses. The study authors consider that the state intervenes excessively in agriculture. There is an apparent tendency to control the prices of certain food products, especially bread, and of a number of domestic appliances, which is a violation of the principles of the World Trade Organisation. The authors say that President Vladimir Voronin’s initiatives on economic liberalisation are an example of groundless intervention in the country’s economy. They have not been coordinated with the businesspeople and this shows that the state is indifferent at the real necessities of the private sector. By its interventions, the state distorts the market, the study says. By supporting certain areas, it harms the economic entities’ right to a healthy market competition. The regulation of prices infringes the basic principles of a free market economy and this affects first of all the economic operators that sustain losses or additional expenses. As long as the government makes decisions and policies in the absence of a substantial feasibility analysis, including an analysis of costs for every adopted measure, we will witness the implementation of useless or even wrong measures, the experts reasoned. The study was carried out by experts of the Institute for Development and Social Initiative (IDIS) “Viitorul” with the financial support of Friedrich Ebert Foundation.