Moldova - Poverty and wealth

Under the Soviet regime, employment was almost total and provided modest livelihoods for nearly everyone in a relatively egalitarian society (with the exception of the more affluent groups of the communist elite and the underworld). But independence and the reforms of the 1990s generated unemployment, crime, corruption, poverty, and illicit fortunes. The population below the poverty line was estimated in 1999 at a stunning 75 percent (in Romania, it was 30 percent; in Russia and

GDP per Capita (US$)
Country 1975 1980 1985 1990 1998
Moldova N/A 1,453 1,572 1,776 614
United States 19,364 21,529 23,200 25,363 29,683
Russia 2,555 3,654 3,463 3,668 2,138
Romania 1,201 1,643 1,872 1,576 1,310
SOURCE: United Nations. Human Development Report 2000; Trends in human development and per capita income.

Distribution of Income or Consumption by Percentage Share: Moldova
Lowest 10% 2.7
Lowest 20% 6.9
Second 20% 11.9
Third 20% 16.7
Fourth 20% 23.1
Highest 20% 41.5
Highest 10% 25.8
Survey year: 1992
Note: This information refers to income shares by percentiles of the population and is ranked by per capita income.
SOURCE: 2000 World Development Indicators [CD-ROM].

Ukraine, 25-50 percent). Moldova's Gini index (measuring economic equality, with 0 standing for perfect equality and 100 for perfect inequality) in 1992 was 34.4, far lower than in the United States (40.6), but considerably higher than in Bulgaria (28) and Greece (32).

The social cost of market reforms has been greater than was assumed, and the state has proved incapable of ensuring support for the poor. It failed to stimulate the private sector as a compensation for unemployment or to reorganize the social services. Mass privatization turned unworthy assets over to poor owners and funneled high-quality assets to the well connected. The reach of the underground economy (which was estimated at 35 percent of GDP in 1999), leads to corruption, reduced public revenues, and widening income inequality. Poverty is causing stress, particularly in rural areas, and limiting private economic initiative. To relieve poverty, the Moldovan government has relied on international aid, such as IMF's $142 million poverty reduction facility, and on plans to decentralize social services in order to boost social sector reform.

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