Moldova Trade Study : Note 4. The Performance of Free Economic Zones in Moldova

World Bank

Washington, DC

关键词: TAX INCENTIVES;    RENT SEEKING;    EMPLOYMENT;    RIGHTS;    FOREIGN CAPITAL;   

RP-ID  :  103998

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

In 1995, Moldova introduced freeeconomic zone (FEZ) legislation with the aim of acceleratingsocioeconomic development by attracting domestic and foreigninvestment, promoting exports, and creating employment.Since then, seven free economic zones offering tax andcustoms benefits have been established. This note assessesthe static and dynamic economic benefits of the program inMoldova. The free economic zones have been successful inattracting investment from both domestic and foreignsources. The economic zones have become true exportplatforms, generating a five-fold increase in exportedindustrial production from the zones between 2004 and 2014.On average, employment in the economic zones had a robustgrowth in the last seven years and almost doubled since2008. Evidence suggests that the economic zones havesignificantly contributed to the diversification of exportsand to the changing structure of the Moldovan economy. Theeffect of the economic zones on domestic firms appears to bemodest, however, and unlikely to contribute to thetechnological upgrading and sophistication of the Moldovaneconomy. Free economic zones tend to attract industrialactivities requiring intensive use of human resources forcertain operations. The economic impact of Moldovan freeeconomic zones is ambiguous. Moldovan legislation providessound and transparent provisions, but the main issue is howthis legislation is implemented. The majority ofrecommendations are focused on streamlining theimplementation process, making it easier for companies tooperate. Here are the main recommendations for improving thezones : (i) the importance of fiscal incentives should bedowngraded by shifting to targeted services for businesses;(ii) reduce corruption and increase accountability byestablishing one-stop-shop procedures and elements; (iii)establish a proper mechanism for monitoring and reportingwith the zones residents and administrator; (iv) empower theregulator with additional relevant institutional capacitiesand capabilities; (v) the role of residents in appointingthe administrator should be determinant; and (vi) establisha proper mechanism for compensating residents of the zonesfor restrictive treatment of the real assets.