NATIONAL TEAM Coordination Committee A. Scientific coordinator, editor Dr. Tamara GOLENCO B. Coordinators Dr. Tamara GOLENCO Chapters 1, 4 Dr. Ion SISCANU Chapter 2 Serghei OSTAF Chapter 3 Dr. Dorin VACULOVSCHI Chapter 5 Valeriu ISAICO Chapter 6 Authors 1. Raisa BOTEZATU - SCJ 13. Serghei OSTAF - HCRM 2. Dr. Lilia CARASCIUC - CSSR 14. Dr. Mihai PATRAS - ULIM 3. Taras GRABOVSCHI - ISDP 15. Dr. Victor PITEI - MES 4. Dr. Pavel COJOCARU - CRMP 16. Dr. Victor POPA - ULIM 5. Dr. Ion COMENDANT - IEnAS 17. Dr. Anatol ROJCO - IEAS 6. Anatol COSOLAPOV - MTDCPU 18. Dr. Victor SACA - TUM 7. Yurii DATII - INMAS 19. Mihail SIDOROV - CHR 8. Alexei DOLGANIUC - IRD 20. Dr. Baron SUBASI - CRMP 9. Dr. Mihai GHEORGHITA - SUM 21. Dr. Ion SISCANU - IHAS 10. Dr. Tamara GOLENCO - CRMP 22. Dr. Dumitru TINTIUC - MUM 11. Valeriu ISAICO - TSCAU 23. Dr. Dorin VACULOVSCHI - AES 12. Dr. Ion JIGAU - SUM 24. Dr. Valeriu ZABULICA - CRMP Consultants 1. Dr. Alexandru MURAVSCHI - PM 3. Dr. Ana PASCARU - AS 2. Dr. Marat KOROLI - JSCT 4. Eleva VUTCAREVA - DSAS International consultant, ILO - Maarten Keune Editor - Calvin Allen Coordinator of the UNDP Project - Irene Stavenski on the Formulation of the National Human Development Reports UNDP Moldova 31 August Str. 131 2012 Chiºinãu Moldova FOREWORD Life has to be lived forward, but learned backward. Soren Kirkegaard When Kirkegaard wrote this sentence some 100 years ago it was not necessarily a truism, but it actually captured a forward looking philosophy. We all know that Moldova is going through a complicated process of transition, in the economic, political and social domains. 100 years is not a long time, 7 years are even shorter. The point is, if we can learn, we can live. The UNDP supported National Human Development Reports for Moldova are about learning and, therefore, about living, about Sustainable Human Development. The Republic of Moldova is a young nation struggling with the complex issues of state and people, private and public, urban and rural, national and foreign. The Human Development Reports attempt to provide a yardstick of all of the above, to measure the present status and perceptions and to recommend a possible way ahead. The Report this year is blunt and analytical, it takes stock of the past and points to the future, and it learns and lives. It learns, but it only lives if it is part of a process. And that process will be the continuous dialogue among the citizens of the country, between the state and its people, civil society and Government, Moldova and foreign nations. Moldova has history and traditions, by learning from the past, we can shape the future too. The present Report is part of that history, but used actively, it can be part of the future. Read it and live it, together we can make it. Soren Tejno UNDP Resident Representative UN Resident Coordinator National Human Development Report Republic of Moldova - 1998 iii iv National Human Development Report Republic of Moldova - 1998 BASIC FACTS ABOUT MOLDOVA Official Name: Republic of Moldova Geographical Position: The Republic of Moldova is a state in the South-East of Europe, situated between Romania and Ukraine, in the basin of the Rivers Prut and Nistru Area: 33.8 thousand km2 Population: 4,305,000 people Population Density: 127 people/km2 Capital: Chisinau (about 700 thousand inhabitants) National Holiday: The Independence Day (August 27) National Banner: Three equal vertical stripes of blue, yellow and red (the first one near the flagstaff) with the emblem of Moldova in the center, on the yellow stripe Form of Statehood: Republic The Head of the State: President National Human Development Report Republic of Moldova - 1998 v INTRODUCTION The analysis of the human development processes in the Republic of Moldova is very timely, as it corresponds to the needs of the current stage of transition towards the different pattern of the society organization based on the establishment of the institutions necessary for the proper functioning of a democratic state founded on the principles of the rule of law and market economy. Obviously, the changes which took place in the political and economic system, in the social life and in the mentality of the population of Moldova affected the process of human development, the effects of these changes being, in many cases, negative and unfavorable. Indeed, the "historical interval" passed through by the ex-communist countries is marked by a serious long-lasting crisis as well as by the fundamental changes, accompanied by the inevitable economic imbalances and social tension. The identification, analysis and solution of the complicated human development problems characteristic of this period is very difficult, especially given the lack of experience in the respective field. The role of the state and the efficiency of the government during the transition period is determined by the cognizable effects of the economic and social policies, by the ability of the public authorities to actualize transformations at the lowest social costs as well as by the degree of understanding (acceptance) of changes and of the political responsibility for the success (failure) of the decisions taken. The efficient implementation of reforms is impossible without the unified political will of all the power structures and without the support of the majority of citizens. Although some experts state that the Republic of Moldova is doing much better than other CIS member-states in terms of promoting reforms, the reality does not always prove this statement. The elaboration of the legal framework necessary for the implementation of reforms and making it functional is very slow. The state sector accounts for 48% of the social capital of the nation's economy. The level of productivity and competitiveness remains low. The stocks of goods produced by the national economy equal, on average, one third of the country's GDP. The modification of the direct and indirect functions of the state in promoting the economic and social development is taking place with great difficulties. Indirect mechanisms are practically not operational, with state institutions continuing to use the practice of direct interventions: administrative measures, subsidies, targeted credits, etc. The inconsistency and incoherence of reforms implemented during the previous years have led to the aggravation of the crisis and to an increase in the social costs. At the beginning of 1997, the Republic of Moldova entered the most difficult stage of its transition process. Essential changes and profound reforms, which could "set in motion" the market economy mechanisms, add dynamism to the process of human development and social cohesion and contribute to the expanding of choices, cannot be postponed anymore. At the same time, social costs might further increase, once again putting to the test the patience of the population. As of to date, the country has come to a multidimensional deadlock characterized by the stagnation of the economy (following a sudden decline in 1990-1994); the external and internal debt which has surpassed the critical level; the growing commercial balance deficit; the unprecedented financial difficulties; the mutual debts of the economic entities and those to the state; the increasing salary and pension arrears; the inefficiency of the production process and non-competitiveness of local products; the energy sector crisis; the growth of shadow economy; the malfunctioning of the fiscal system, among many others. The situation is even more difficult given that all the above-mentioned phenomena and processes are taking place under the conditions of a huge financial crisis in the CIS area. Obviously, the human development crisis is deepening which is manifested by the intensification of the process of the populations pauperization, the proliferation of poverty, the increased unemployment and malnutrition; the depreciation of the public education, health care and social protection systems and of the infrastructure; the social anxiety, depression and different forms of social tension; the increased distrust in public authorities. Despite the fact that the Human Development Index, which has slightly increased as compared to 1994, remains at a low level, the Republic of Moldova is still ranked as one of the countries with the medium level of human development in the HDI classification of the nations made by the UN. The 1998 National Human Development Report (NHDR) is focused, primarily, on the problems vi National Human Development Report Republic of Moldova - 1998 related to the evolution and efficiency of the institutions and mechanisms functioning in the state based on the rule of law and their role in the process of transformations. It also addresses the most difficult aspect of the long-lasting transition - poverty. The pauperization of the population, the lack of proper information and the inability of people to accept new mentality, behavior and different life style are considered to be the most important impediments to the implementation of reforms and the achievement of sustainable human development. The final solution of the problem of poverty entirely depends on the acceleration of the fundamental reforms and on the speeding up of economic and human development processes. In this context, to be highlighted is that all the social protection measures have a very specific nature; under the critical circumstances, they may be necessary to undertake even in the most developed countries. It is widely known that human freedom gives an impulse to