THE PLACE OF THE REPUBLIC OF MOLDOVA IN REGIONAL FOREIGN DIRECT INVESTMENT FLOWS
THE PLACE OF THE REPUBLIC OF MOLDOVA IN REGIONAL FOREIGN DIRECT INVESTMENT FLOWS

Summary/Abstract: This paper analyzes the evolution and impact of Foreign Direct Investment (FDI) in the economies of the Eastern Partnership countries of the European Union, with a special focus on the Republic of Moldova. The study highlights Moldova’s lagging FDI inflows compared to its regional counterparts due to a slower transition to a market economy, political instability, and dependence on Russia. While Moldova has made progress in attracting investments from the European Union, particularly after signing the Association Agreement in 2014, Russia remains a significant source of FDI for the period of 1991-2019. Key industries, including energy, automotive, and financial services, benefit from these investments, though Moldova's reliance on a narrow set of countries poses challenges. The paper also examines the role of privatization in shaping Moldova's FDI landscape and discusses how political and economic events such as the 2014 banking scandal and geopolitical tensions in Ukraine influenced FDI patterns. The findings suggest that while Moldova’s FDI stock has grown, it remains vulnerable to external shocks and heavily influenced by regional dynamics.

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