Foreign Direct Investments Surge in the Republic of Moldova Despite Skepticism

Despite investor skepticism and risk aversion putting significant pressure on global investments, foreign direct investments in the Republic of Moldova increased by 50% in 2022, reaching $586 million USD. At the same time, foreign direct investment (FDI) enterprises demonstrate higher efficiency, acting as promoters of advanced management and production technologies and quality standards.

FDI contributes to the development of industries and demonstrates systemic importance for sustainable development and the national economy. This was demonstrated in the updated study “The Impact of Foreign Direct Investments on the Moldovan Economy, 2012-2022,” prepared by BIS Consulting at the request of the Foreign Investors Association of Moldova (FIA).

Foreign investors in the Republic of Moldova acted contrary to expectations: they reinvested their profits in the national economy (a 1.9-fold increase).

This led to an increase in foreign direct investments in 2022 by approximately 50% compared to the 2021 level and about 16% compared to the 2019 level (pre-crisis period). Despite the pandemic and the war in Ukraine, which brought with them a series of uncertainties, increased risks, and pressures on FDI, their volume in Moldova did not decrease but, on the contrary, increased. This development demonstrates that there was no panic among foreign investors, as manifested, for example, by the usual withdrawal of capital from the economy.

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However, the volume of foreign direct investments in the Republic of Moldova remains one of the lowest among Eastern European countries, at only $1,006 USD per capita.

The study confirmed that FDI enterprises are, on average, twice as productive, directly reflecting higher economic growth. While companies with FDI represent only about 15.4% of all employees in the country, they generate 28.2% of the country’s production assets. They also make a significant contribution to the budget of the Republic of Moldova, contributing 25.1% of income tax revenues and 24.2% of social contributions.

Labor productivity in FDI enterprises is approximately 90% higher than in local private enterprises. Mixed-capital ownership enterprises with foreign participation achieve the highest labor productivity (3,042 thousand lei per employee in 2022), with consistent growth every year. Local private enterprises have labor productivity nearly twice as low as FDI enterprises (1,113 thousand lei per employee), which is nearly equivalent to the country’s average (1,156 thousand lei per employee).

FDI enterprises represent 19.7% of the overall gross value added to the economy, with very significant shares in certain activities (financial and insurance activities (59.7%), information, and communications (47.4%)).

The complete report of the study is available online HERE in both Romanian and English languages.