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The Economic Prospects of the CIS

Sources of Long Term Growth

Edited by Gur Ofer and Richard Pomfret

This book brings together ten original studies on the transition and growth experience and the foundations for long-term growth of the newly independent states created by the dissolution of the Soviet Union.
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Chapter 5: Barriers to growth in Moldova

Artur Radziwill and Oleg Petrushin


Artur Radziwill and Oleg Petrushin The inability of societies to develop effective, low-cost enforcement of contracts is the most important source of both historical stagnation and contemporary underdevelopment in the Third World. Douglass North 1. INTRODUCTION Gur Ofer (2000) offers an appealing metaphor of transition. In this metaphor communist and developing economies have long travelled distinctly different roads with the same aim of full economic modernization. When the communist countries hit a dead end in the late 1980s, transition was an attempt to converge to the market-based road without losing the previously covered distance. Central European countries are close to achieving this goal and are now members of the Organization for Economic Cooperation and Development (OECD), and at the gates of the European Union and NATO. Other countries were less successful, and Moldova is one of the least fortunate.1 In the world of Ofer’s metaphor, Moldova was subject to a dramatic reversal, which largely eliminated its previous achievements. It is enough to state that the output in Moldova during the 1990s retreated to the level of the late 1950s and early 1960s (De Broeck and Koen, 2000). Moldova has yet to find a new sustainable development path. For now it is still trapped in a web of uncoordinated policies and dysfunctional institutions. This chapter attempts to offer a comprehensive and consistent picture of growth in the Republic of Moldova under transition to a market economy. Developments in Transnistria, the self-proclaimed separatist territory on the left bank...

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