This current Country Economic Memorandumis intended to provide a comprehensive analysis ofgrowthconstraints and recommendations. While it updates someaspects of these earlier studies, its main focus is onenterprise performance. Insofar as enterprise performanceoccurs in a larger institutional context, this focusnecessarily touches on several of the earlier themes,particularly the rule of law, business regulation, andeducation. The first chapter presents a diagnostic thathighlights the problem of falling productivity in theenterprise sector and points to elements of market structure(particularly state ownership) that undermine productivitygrowth and curtail the growth of the private sector. Thischapter also focuses on demand-side issues in exportmarkets, and highlights policy lessons from sectors withhigh productivity that could drive future growth. A secondchapter focuses on foreign firms, which are highproductivity enterprises within Moldova, and looks atinvestment promotion and ways to improve the contribution ofForeign Direct Investment (FDI) to the economy. Subsequentchapters extend the analysis to incentives shapingenterprise performance and opportunities for growth led bythe private sector, particularly: competition and regulatorypolicies (Chapter 3); tax policy insofar as it affectsincentives and tax buoyancy that underpin macroeconomicstability (Chapter 4); and finally, education as a crucialinput into enterprise development (Chapter 5).
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