Why is Moldova so poor?

Moldova became an independent republic in 1991 after the collapse of the Soviet Union. Moldova is the poorest country in Europe. Its gross domestic product per capita stands at only $5,200 (the USA’s is about $64,000). In early October 2022 the government raised the public sector minimum wage to 3,500 lei / month ($180), the “in pocket” salary being less after taxes. This raise brought the public sector minimum wage into line with the private sector minimum, but it still falls far short of the cost of living in most parts of Moldova.

There are several causes of poverty in Moldova. Here are a few:

1. Lack of large-scale industrialization
Huge population boom between 1920s until the mid-1980s. Rural over-population led to lower bargaining power of labor.

2. Limited agricultural investment
Poverty is more common among farming families. The country’s history can partly explain why this is. The government divided a lot of agricultural land into plots too small to be commercially viable. The small size of the plots–most about 6 acres–has meant that farmers had to depend on manual labor instead of large, advanced machinery and technology. This factor has led to inefficiencies and poor yields compared to the land’s potential.

Rural Moldovans continue to lack access to new technology, agricultural support services and financial services, which shackles them to a life of subsistence farming. Agriculture’s share of Moldova’s GDP is around 14 percent.

3. Trade restrictions
Sometimes families, businesses and entrepreneurs have goods, but they do not have reliable buyers. Countries that Moldova would usually trade with have imposed strict sanctions or all-out bans on products from the small nation. Russia has repeatedly rejected Moldovan goods, such as wine, fruit and vegetables, by stating they do not meet its high-quality standards. Before the embargo in 2014, 90 percent of Moldova’s apples went to Russia. Now they are sent to other countries that buy them at lower prices.

4. Government corruption
Corrupt oligarchs and politicians rob citizens of money. In 2015, $1 billion — or about one-eighth of the country’s GDP — was stolen from the country’s three largest banks. Around 40 people, including a former prime minister, either helped or benefited from the massive theft.

Corruption in Moldova makes it difficult for people to succeed in business. Around 30 percent of all companies reported that public authorities requested bribes at least once per year to pass inspections, get permits, obtain utilities access or secure an operating license. The cost of electricity in the country is nearly double the price in the rest of the region, according to the GAN Business Anti-Corruption Portal. These oppressive practices stifle Moldova’s business environment and rank among the causes of poverty in Moldova.

5. Weak social systems
UNICEF reports that Moldova has a social protection system that comprises 15 benefits and services. But just one of these benefits is for the poor. Furthermore, money earmarked for the poor does not always end up in the right hands. A state report found that 17% of social assistance is used inefficiently and goes to families with high incomes.

6. Aging Population
Adding pressure to government financial resources is an aging population. Low wages, limited educational opportunities and poor job prospects push young Moldovans to leave their home country. The high proportion of the country’s elderly is putting pressure on the country’s pension system.

7. An Unstable Population
The foundation of a nation’s economy relies heavily upon its people. In the case of Moldova, however, the unstable population has led to a highly volatile economy. The official population of Moldova is 3.5 million. However, estimates determine that the true figure is much less due to a significant level of out-migration with people seeking work in other countries.

8. Decreased fertility rates
The total fertility rate (TFR) at which a population replaces itself from one generation to the next is roughly 2.1 for most countries. Moldova’s rate was 1.3. As women have fewer children within Moldova, the overall population is contracting, leaving the increased share of elderly people with very few young people to care for them in the future.

9. Natural Disasters
Many regions of Moldova are at increased risk of earthquakes and flooding. This has a significant impact on the economy because over half the population lives in rural areas and more than 40% of the economy relies on industry and agriculture.

Citizens in areas of higher risk of natural disasters also suffer from weaker economies as a result. Natural disasters impact up to 3% of the region’s GDP, leading to a potential loss of $66 million. These events can damage arable land, create food shortages that leave people hungry and cause people to suffer from injury or loss. These environmental challenges can significantly impact the lives of citizens and drag the most vulnerable peoples of Moldova into poverty.

10. Sanitation and Health Care
Currently, millions of Moldovans must choose between their paycheck and their health as 60% of the economy in Moldova is service-oriented. The current global economic crisis that began as a consequence of the COVID-19 pandemic will likely continue to impact Moldova significantly. Estimates determine the nation could still suffer through an economic recession of 3.1%.

11. Remittances
The country is highly dependent on remittances, with 1.91 billion USD remitted in 2019 (16% of GDP), putting Moldova in the top 20 of the most remittances-dependent countries in the world.

12. Low influence of Christian Morality
Since just 5% of Moldovans are identified as born-again Christians have little influence on society. While the church of Jesus Christ is growing, entrenched corruption and related difficulties are a strong headwind.

Sources: Based on borgenproject.org/causes-of-poverty-in-moldova, joshuaproject.net/countries/MD, worldpopulationreview.com (all accessed October 7, 2022); and David Smith, “Moldova Matters: Weekly Roundup” (October 6, 2022)

To support evangelism in Moldova please send your check to Moldova Mission Network, 4919 43rd Place, NW Washington, DC 20016. Alternatively, use our online website to make a monthly or one-time donation: