Economic Crimes in Moldova

R E S E A R C H P A P E R

ECONOMIC CRIMES IN MOLDOVA

Moldova carries the burden of a painful past whose legacy is being felt every day by each of its citizens. As other transitional countries, Moldova has experienced a deep decline in its economy, a part of the blame being attributed to the economic and financial crimes that suppressed the economic development and had negatively affected the economic discipline and the stability of the country. Moldova is a country in transition, characterized by conflict, weak structures, lack of transparency, insufficient resources, low wages for state employees, high state debt, lack of competition, poverty. The economy is not developing according to the rules of the market, creating advantageous conditions for the development of the shadow economy. As a matter of fact, the underground economy expands continuously, tax evasion, illegal imports-exports, money laundering reaching substantial proportions. At the same time, the lack of control upon state employees’ activity and low enforcement, as well as postponements in payment of wages, contribute to the extension of corruption and increased level of economic crime in Republic of Moldova.

It is believed that the shadow economies soften the impact of economic shocks in countries of transition. On one hand, they cause losses to the state as taxes are not being paid, credibility in state institutions is lost, and, as a result, economic and political instability is formed. At the same time, “the shadow economy brings additional revenues for its operators and members of their families, being sometimes their only source of income, and diminishing unemployment rate”. The shadow economy is believed to increase competition, as same good and services as in the formal economy are provided, the only difference being that the former are cheaper. Another of its advantages is that the shadow economy is more adjustable to new conditions, as no bureaucracy that would lengthen many processes exists.

In 1997,