Moldova Trade Study : Note 4. The Performance of Free Economic Zones in Moldova
In 1995, Moldova introduced free economic zone (FEZ) legislation with the aim of accelerating socioeconomic development by attracting domestic and foreign investment, promoting exports, and creating employment. Since then, seven free economic zones...
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| Language: | English en_US |
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Washington, DC
2016
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| Online Access: | http://documents.worldbank.org/curated/en/2016/03/26076092/performance-free-economic-zones-moldova http://hdl.handle.net/10986/24006 |
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okr-10986-24006 |
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oai_dc |
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Digital Repository |
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Foreign Institution |
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Digital Repositories |
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World Bank Open Knowledge Repository |
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World Bank |
| language |
English en_US |
| topic |
TAX INCENTIVES RENT SEEKING EMPLOYMENT RIGHTS FOREIGN CAPITAL EQUIPMENT ACCOUNTING EXCISE TAXES PRODUCTION LOCAL ECONOMY FOREIGN DIRECT INVESTMENTS STOCK FOREIGN INVESTORS NATIONAL ECONOMY STRUCTURAL CHANGE INCOME EXCHANGE GDP PER CAPITA INFORMATION LABOR FORCE EXPORTS DOMESTIC MARKET TAX COLLECTION MONITORING EXPORTERS REVENUES TAX BENEFITS EFFECTS INCENTIVES INFORMATION TECHNOLOGIES TAX INPUTS JOINT VENTURES OWNERSHIP INCOME TAX GOVERNMENT SUPPORT REGULATORY AUTHORITY FREE TRADE FOREIGN INVESTMENTS TRENDS DRIVERS PRODUCTION PROCESS DEVELOPMENT LABOR MARKET LONG TERM ASSETS TRAINING DEVELOPMENT ECONOMICS EXTENSIVE ECONOMIC BENEFITS RENT DEVELOPMENT STRATEGIES PERSONAL INCOME PRODUCTIVITY TRANSFERS ECONOMIC POLICIES TRADE POLICY STANDARDS LABOR TAX REVENUES INVESTMENT OPPORTUNITIES TAX COLLECTIONS RESERVES TRADE COMPETITIVENESS FINANCE EFFICIENCY TAXES TRANSACTIONS EXPORT FLOWS INCOME TAXES INVESTORS VALUE ADDED GOOD FRAUD WAGES POLICIES FINANCIAL CRISIS FUTURE VALUE COMPETITIVENESS RETURNS CREDIT FOREIGN INVESTMENT COMPARATIVE ADVANTAGES TRADE PROTECTION INVESTMENT PROJECTS SMALL INVESTORS AGRICULTURE ECONOMY TAX RATES EMPLOYMENT GROWTH JOB CREATION SHARES ASSETS DEFAULT MARKET FOREIGN EXCHANGE EMERGING ECONOMICS EXPORTER LONG-TERM INVESTMENTS MANAGEMENT INFRASTRUCTURE INVESTMENTS TAXATION ECONOMIC DEVELOPMENT TRADE INTERESTS GDP GOODS INVESTMENT RISK HUMAN RESOURCES SHARE INVESTMENT CLIMATE COLLATERAL INVESTMENT ACTIVITY TARIFF TANGIBLE ASSETS SUPPLY FOREIGN WORKERS TRADER PRIVATE INVESTORS INNOVATION FOREIGN COMPANIES LAW PROFIT INVESTMENTS UNFAIR COMPETITION SUPPLIERS INSTITUTIONAL CAPACITIES DIRECT INVESTMENTS OUTCOMES POSITIVE EFFECTS GUARANTEE LONG-TERM ASSETS BENEFITS INVESTING |
| spellingShingle |
TAX INCENTIVES RENT SEEKING EMPLOYMENT RIGHTS FOREIGN CAPITAL EQUIPMENT ACCOUNTING EXCISE TAXES PRODUCTION LOCAL ECONOMY FOREIGN DIRECT INVESTMENTS STOCK FOREIGN INVESTORS NATIONAL ECONOMY STRUCTURAL CHANGE INCOME EXCHANGE GDP PER CAPITA INFORMATION LABOR FORCE EXPORTS DOMESTIC MARKET TAX COLLECTION MONITORING EXPORTERS REVENUES TAX BENEFITS EFFECTS INCENTIVES INFORMATION TECHNOLOGIES TAX INPUTS JOINT VENTURES OWNERSHIP INCOME TAX GOVERNMENT SUPPORT REGULATORY AUTHORITY FREE TRADE FOREIGN INVESTMENTS TRENDS DRIVERS PRODUCTION PROCESS DEVELOPMENT LABOR MARKET LONG TERM ASSETS TRAINING DEVELOPMENT ECONOMICS EXTENSIVE ECONOMIC BENEFITS RENT DEVELOPMENT STRATEGIES PERSONAL INCOME PRODUCTIVITY TRANSFERS ECONOMIC POLICIES TRADE POLICY STANDARDS LABOR TAX REVENUES INVESTMENT OPPORTUNITIES TAX COLLECTIONS RESERVES TRADE COMPETITIVENESS FINANCE EFFICIENCY TAXES TRANSACTIONS EXPORT FLOWS INCOME TAXES INVESTORS VALUE ADDED GOOD FRAUD WAGES POLICIES FINANCIAL CRISIS FUTURE VALUE COMPETITIVENESS RETURNS CREDIT FOREIGN INVESTMENT COMPARATIVE ADVANTAGES TRADE PROTECTION INVESTMENT PROJECTS SMALL INVESTORS AGRICULTURE ECONOMY TAX RATES EMPLOYMENT GROWTH JOB CREATION SHARES ASSETS DEFAULT MARKET FOREIGN EXCHANGE EMERGING ECONOMICS EXPORTER LONG-TERM INVESTMENTS MANAGEMENT INFRASTRUCTURE INVESTMENTS TAXATION ECONOMIC DEVELOPMENT TRADE INTERESTS GDP GOODS INVESTMENT RISK HUMAN RESOURCES SHARE INVESTMENT CLIMATE COLLATERAL INVESTMENT ACTIVITY TARIFF TANGIBLE ASSETS SUPPLY FOREIGN WORKERS TRADER PRIVATE INVESTORS INNOVATION FOREIGN COMPANIES LAW PROFIT INVESTMENTS UNFAIR COMPETITION SUPPLIERS INSTITUTIONAL CAPACITIES DIRECT INVESTMENTS OUTCOMES POSITIVE EFFECTS GUARANTEE LONG-TERM ASSETS BENEFITS INVESTING World Bank Moldova Trade Study : Note 4. The Performance of Free Economic Zones in Moldova |
| geographic_facet |
Europe and Central Asia Moldova |
| description |
In 1995, Moldova introduced free
economic zone (FEZ) legislation with the aim of accelerating
socioeconomic development by attracting domestic and foreign
investment, promoting exports, and creating employment.
Since then, seven free economic zones offering tax and
customs benefits have been established. This note assesses
the static and dynamic economic benefits of the program in
Moldova. The free economic zones have been successful in
attracting investment from both domestic and foreign
sources. The economic zones have become true export
platforms, generating a five-fold increase in exported
industrial production from the zones between 2004 and 2014.
On average, employment in the economic zones had a robust
growth in the last seven years and almost doubled since
2008. Evidence suggests that the economic zones have
significantly contributed to the diversification of exports
and to the changing structure of the Moldovan economy. The
effect of the economic zones on domestic firms appears to be
modest, however, and unlikely to contribute to the
technological upgrading and sophistication of the Moldovan
economy. Free economic zones tend to attract industrial
activities requiring intensive use of human resources for
certain operations. The economic impact of Moldovan free
economic zones is ambiguous. Moldovan legislation provides
sound and transparent provisions, but the main issue is how
this legislation is implemented. The majority of
recommendations are focused on streamlining the
implementation process, making it easier for companies to
operate. Here are the main recommendations for improving the
zones : (i) the importance of fiscal incentives should be
downgraded by shifting to targeted services for businesses;
(ii) reduce corruption and increase accountability by
establishing one-stop-shop procedures and elements; (iii)
establish a proper mechanism for monitoring and reporting
with the zones residents and administrator; (iv) empower the
regulator with additional relevant institutional capacities
and capabilities; (v) the role of residents in appointing
the administrator should be determinant; and (vi) establish
a proper mechanism for compensating residents of the zones
for restrictive treatment of the real assets. |
| format |
Report |
| author |
World Bank |
| author_facet |
World Bank |
| author_sort |
World Bank |
| title |
Moldova Trade Study : Note 4. The Performance of Free Economic Zones in Moldova |
| title_short |
Moldova Trade Study : Note 4. The Performance of Free Economic Zones in Moldova |
| title_full |
Moldova Trade Study : Note 4. The Performance of Free Economic Zones in Moldova |
| title_fullStr |
Moldova Trade Study : Note 4. The Performance of Free Economic Zones in Moldova |
| title_full_unstemmed |
Moldova Trade Study : Note 4. The Performance of Free Economic Zones in Moldova |
| title_sort |
moldova trade study : note 4. the performance of free economic zones in moldova |
| publisher |
Washington, DC |
| publishDate |
2016 |
| url |
http://documents.worldbank.org/curated/en/2016/03/26076092/performance-free-economic-zones-moldova http://hdl.handle.net/10986/24006 |
| _version_ |
1764455508401455104 |
| spelling |
okr-10986-240062021-06-14T10:18:49Z Moldova Trade Study : Note 4. The Performance of Free Economic Zones in Moldova World Bank TAX INCENTIVES RENT SEEKING EMPLOYMENT RIGHTS FOREIGN CAPITAL EQUIPMENT ACCOUNTING EXCISE TAXES PRODUCTION LOCAL ECONOMY FOREIGN DIRECT INVESTMENTS STOCK FOREIGN INVESTORS NATIONAL ECONOMY STRUCTURAL CHANGE INCOME EXCHANGE GDP PER CAPITA INFORMATION LABOR FORCE EXPORTS DOMESTIC MARKET TAX COLLECTION MONITORING EXPORTERS REVENUES TAX BENEFITS EFFECTS INCENTIVES INFORMATION TECHNOLOGIES TAX INPUTS JOINT VENTURES OWNERSHIP INCOME TAX GOVERNMENT SUPPORT REGULATORY AUTHORITY FREE TRADE FOREIGN INVESTMENTS TRENDS DRIVERS PRODUCTION PROCESS DEVELOPMENT LABOR MARKET LONG TERM ASSETS TRAINING DEVELOPMENT ECONOMICS EXTENSIVE ECONOMIC BENEFITS RENT DEVELOPMENT STRATEGIES PERSONAL INCOME PRODUCTIVITY TRANSFERS ECONOMIC POLICIES TRADE POLICY STANDARDS LABOR TAX REVENUES INVESTMENT OPPORTUNITIES TAX COLLECTIONS RESERVES TRADE COMPETITIVENESS FINANCE EFFICIENCY TAXES TRANSACTIONS EXPORT FLOWS INCOME TAXES INVESTORS VALUE ADDED GOOD FRAUD WAGES POLICIES FINANCIAL CRISIS FUTURE VALUE COMPETITIVENESS RETURNS CREDIT FOREIGN INVESTMENT COMPARATIVE ADVANTAGES TRADE PROTECTION INVESTMENT PROJECTS SMALL INVESTORS AGRICULTURE ECONOMY TAX RATES EMPLOYMENT GROWTH JOB CREATION SHARES ASSETS DEFAULT MARKET FOREIGN EXCHANGE EMERGING ECONOMICS EXPORTER LONG-TERM INVESTMENTS MANAGEMENT INFRASTRUCTURE INVESTMENTS TAXATION ECONOMIC DEVELOPMENT TRADE INTERESTS GDP GOODS INVESTMENT RISK HUMAN RESOURCES SHARE INVESTMENT CLIMATE COLLATERAL INVESTMENT ACTIVITY TARIFF TANGIBLE ASSETS SUPPLY FOREIGN WORKERS TRADER PRIVATE INVESTORS INNOVATION FOREIGN COMPANIES LAW PROFIT INVESTMENTS UNFAIR COMPETITION SUPPLIERS INSTITUTIONAL CAPACITIES DIRECT INVESTMENTS OUTCOMES POSITIVE EFFECTS GUARANTEE LONG-TERM ASSETS BENEFITS INVESTING In 1995, Moldova introduced free economic zone (FEZ) legislation with the aim of accelerating socioeconomic development by attracting domestic and foreign investment, promoting exports, and creating employment. Since then, seven free economic zones offering tax and customs benefits have been established. This note assesses the static and dynamic economic benefits of the program in Moldova. The free economic zones have been successful in attracting investment from both domestic and foreign sources. The economic zones have become true export platforms, generating a five-fold increase in exported industrial production from the zones between 2004 and 2014. On average, employment in the economic zones had a robust growth in the last seven years and almost doubled since 2008. Evidence suggests that the economic zones have significantly contributed to the diversification of exports and to the changing structure of the Moldovan economy. The effect of the economic zones on domestic firms appears to be modest, however, and unlikely to contribute to the technological upgrading and sophistication of the Moldovan economy. Free economic zones tend to attract industrial activities requiring intensive use of human resources for certain operations. The economic impact of Moldovan free economic zones is ambiguous. Moldovan legislation provides sound and transparent provisions, but the main issue is how this legislation is implemented. The majority of recommendations are focused on streamlining the implementation process, making it easier for companies to operate. Here are the main recommendations for improving the zones : (i) the importance of fiscal incentives should be downgraded by shifting to targeted services for businesses; (ii) reduce corruption and increase accountability by establishing one-stop-shop procedures and elements; (iii) establish a proper mechanism for monitoring and reporting with the zones residents and administrator; (iv) empower the regulator with additional relevant institutional capacities and capabilities; (v) the role of residents in appointing the administrator should be determinant; and (vi) establish a proper mechanism for compensating residents of the zones for restrictive treatment of the real assets. 2016-04-05T19:12:19Z 2016-04-05T19:12:19Z 2016-03-03 Report http://documents.worldbank.org/curated/en/2016/03/26076092/performance-free-economic-zones-moldova http://hdl.handle.net/10986/24006 English en_US CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank Washington, DC Economic & Sector Work Economic & Sector Work :: Foreign Trade, FDI, and Capital Flows Study Europe and Central Asia Moldova |