One might imagine that because Moldova is part of Europe, it would be prosperous. However, Eastern Europe is far different from Western Europe; Eastern Europe is much poorer, with Moldova’s poverty rate among the highest.
The reason for this has to do with the collapse of the Soviet Union. When the Soviet Union fell, the people of what is now Moldova came together to create their own government. However, this proposition was riddled with challenges:
- Previously, no government ruled the land, which meant that the leaders needed to set up the government first, with all its bureaucratic departments, which also made the writing of Moldova’s constitution difficult.
- Because of the former Soviet Union, it was difficult for the people to find leaders that were not corrupt.
- Finally, the change from a communist to a capitalist market caused chaos, affecting the production of produce. This gave the country a difficult start, and officials did not have the time (or the resources) to map out Moldova’s poverty rate until 2003. Since then, Moldova’s poverty rate rose to an all-time high of about 30% in 2006.
The World Bank Group, based in Washington, DC, stands at the forefront of reducing this number. With a multitude of different projects, the group gives out loans to developing countries around the world. This has helped tremendously, not only with Moldova’s GDP but also with Moldova’s poverty rate. Eight years after the all-time high of 30% of people living under the poverty line, the number had reduced to only 11.4% in 2014.
However, the country still has a long way to go before poverty becomes an issue of the past. Just in 2014, the National Bank uncovered a corruption scandal; the equivalent of $1 billion (12.5% of the country’s GDP) was stolen, causing an economic recession.
Although the country recovered within two years, the scandal, as well as recent political events, indicates Moldova’s state of security. This will need to be addressed if the country will continue to grow economically.
– Michal Burgunder