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"Economic competitiveness is a heavy burden for Moldova"
Ion Basiul, October 11, 2005
According to an economic competitiveness top drafted on basis of the annual report of the World Economic Forum, organiser of the popular forum in Davos, Moldova is ranked the 82nd place among 117 states included in the top. Besides this evaluation undertaken on basis of an indicator, which measures the medium- and long-term (5-8 years) economic growth potential, World Economic Forum took into account factors which contribute to the current productivity.
But let's speak about economic competitiveness top. If to trust these standings, then the fact that countries like Tanzania, Namibia or Botswana, which have suffered hunger and civil wars until recently and do not have our aspirations and possibilities, are placed before us does not give a good account of ourselves.
However, we do not fight for competitive advantages anymore. We rely on comparative advantages. What God gave us: raw products, especially foods, cheap labour force. However, we have neither a competitive climate, nor laws to impose a performance in work and vocation of what was done, because we lack a competitive restriction.
On the other hand, Moldovans earn among lowest salaries. Much, very much below what workers in the European Union earn. This situation is normal as long as the efficiency rate is seven times better in the west of Europe than in Moldova. In spite of almost equal prices, a Moldovan is paid for his work about 20-fold less than a French or an Italian. Or some 6-fold less than a Pole or a Hungarian. We rank a last place in Europe with a monthly medium salary of less than 100 euros.
Certain economists say that all the bad will bring... the good. Being loyal to theory of comparative advantage, launched by classicists of political economy, they are not ashamed to write or say that sustenance salaries of Moldovans represent a terrible advantage. This is the theory. Let's see, however, what the practice shows us. We had failed to raise more than 700-800 million dollars from exports for years in a row.
We exceeded one billion dollars just in 2003, being however much below level of some countries such as Albania or Croatia. Collections from exports have grown since then, but they were much lower than collections from imports. The reason is that Moldovan products lack the best paid side in international trade: contribution of creativity.
So, competitiveness. Why do we need our comparative advantage then? It doesn't matter that we are a big exporter of wines and food products. Yes, this is an advantage that God gave us, but I do not think that the wine making is the ground of competitiveness and economic growth. What would be useful to produce or what products would go through competition both on domestic market, and on foreign market? This is not a simple question.
Many persons think that the state must invest in wine making sector. With all my respect, I am not confident that this would be the best solution. This is the problem of problems for us - what should we do, what should be the structure of Moldovan economy, structure which would allow us to compete abroad, taking into account our potential.
The fertile land is a wealth of ours and an important potential for Moldova for sure. However, lacking an increased productivity in agriculture, we should go in direction of services, don't you think? As for example, if a building is constructed on 0.1 hectares of land and several IT specialists work there, be sure that they will earn a day more than farmers earn a year. So, investments should go to this sector, to innovation, it means to branches where capital and human potential are predominant.
The entire structure of the old theory was broken. It is time of competitive advantages. It means that God gives opportunities, but not gifts. It is important what of opportunities that God gave us we have used.
The national economies were counting their "comparative advantages" till a couple of years ago: industries close to raw materials, abundant energy resources, cheap labour force. However, this was yesterday. We see today how these criteria are in the middle ground. The competitive advantage is in foreground now. The advantage that no nation uses the way God gave it, in raw condition, but it processes it with intelligence.
Finland leads the competitiveness top, cooking a coffee which contains products with fewer raw materials (iron, steel, wood, plastics, energy resources) and more intelligence included in the final substance, with Nokia being the skin.
However, Moldova continues to hold the red light in Europe and the world because it does not have competitive advantages, advantages based on a modern work, and I think that we will not have competitive advantages soon.
Do we want efficiency? Do we want competitiveness? We are free to release individual initiative and personal risk. Or, the private initiative itself is the fundamental condition for prosperity of a society, the way classicists of economic liberalism had demonstrated. We must get rid of collectivist mentality, mentality which fuels an economic system whose burden is moving from a shoulder to another shoulder without being observed. Thousands of people with insufficient incomes have the illusion that they are economically safe under its used coverage. The illusion is the worst and most dangerous one.
Therefore, more action, incision and personal courage, these are ingredients of our success as society, being able to ensure our entry with equal rights in family of European nations in a farther future.