Moldova, with a population of 4.3 million, is one of the poorest countries in Europe, with per capita GNP of $328. This ethnically diverse country is wedged between Ukraine and Romania. It was the second smallest country in the FSU and has the highest population density. Moldova’s rich soil and temperate climate made the country a major supplier of agricultural products to the FSU.

Moldova’s boundaries have been redrawn many times. Once part of the Ottoman Empire, the country was absorbed into the Russian Empire in 1812. After a brief period of independence in 1918, it became part of Romania. During World War II, the FSU annexed the territory on the right bank of the Dniestr River. At the same time Moldova lost part of its territory to Ukraine, while being combined with the Moldavian Autonomous republic of Ukraine to form Moldova as it is constituted today. The majority of the population consists of ethnic Romanians (65 percent), but Moldova also has sizable minorities of Ukrainians and Russians (13 percent each), together with Bulgarians (2 percent), a Christian Turkish people known as the Gagauz (3.5 percent), and other ethnic minorities.

Under the command economy of the FSU, Moldova’s economic role was as a producer of raw and processed foodstuffs, primarily grapes, grains, wines, vegetables, and livestock. Agriculture accounted for more than 40 percent of the net material product, while agroindustry contributed approximately half of the almost 40 percent of net material product accounted for by the industrial sector.

Moldovan industrial enterprises registered 14 percent growth in the first 11 months of 2001 compared with the same period of 2000, and the food processing industry accounted for 70 percent of overall industrial output. Moldova’s economy depends on trade, with the shares of imports and exports averaging 50 percent of GDP. Its principal exports are agricultural, including wine, processed foods, and tobacco products. The country is almost totally dependent on imported energy, and most other inputs are also imported, mostly from Russia and Ukraine. Given Moldova’s small domestic consumer base, future growth is likely to be export led, and the country will need to switch its resources into products that have profitable export markets.

The country’s external debt has grown enormously in the past eight years and now stands at $1.5 billion, or 120 percent of GDP. Western financial assistance and help with economic reforms and mass privatization did not result in economic growth until this year, when economic growth is expected to reach 4 to 5 percent.