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  Foreword
  Small and medium-sized enterprises (SME) are an important component of the Republic of Moldova’s economy, representing 98% of all businesses in the country and 59% of employment. Within the SME sector, although the economic and social role of micro-companies is essential – they make up 76% of all SMEs – enterprises in the small and medium-sized segments tend to be larger contributors to employment and economic growth. In the post-economic crisis period, the challenge for policy makers in the country will thus be to support the development of these micro-businesses while at the same time strengthening the competitiveness of "larger" SMEs. The effectiveness of this policy will determine the success of economic recovery. In this context, the report provides a detailed assessment and benchmarking of critical policy settings and institutional conditions that shape the environment for SMEs in the Republic of Moldova.
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  Acknowledgments
  The following report presents the findings of an assessment that was undertaken in the Republic of Moldova between March 2010 and December 2010. This work is part of a project to support the development of micro, small and medium-sized enterprises in the Republic of Moldova conducted by the OECD with the financial support of the Ministry for Development Co-operation of the Government of the Netherlands. As part of its review, the OECD team conducted several missions to the Republic of Moldova to review findings and to conduct interviews with government officials, representatives of public authorities and of the private sector and with international organisations.
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  Abbreviations
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  Executive Summary
  Over the last five years, small and medium-sized enterprises (SMEs)1 have expanded their role as main employment generators. SMEs represent 59% of employment in 2009 compared to 55% in 2005. This trend has been fueled, up to the end of 2007, by a high rate of enterprise creation, with an average enterprise birth rate of 22% over the period.2 In 2009, while the economy contracted by 6.5% in real term compared to 2008 (World Bank, 2010a), SMEs experienced a less severe downturn than large enterprises, both in terms of employment and in turnover. As the country recovers from the impact of the global financial crisis, improvement of the productivity of SMEs could contribute to foster a new wave of economic expansion in the country. In order to benefit from this potential, reforms need to be made to improve the business environment and help SMEs cope with specific obstacles to their development.
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  The Micro, Small and Medium-sized Enterprise Sector in the Republic of Moldova
  This chapter provides a profile of the small and medium-sized enterprise (SME) sector as a background for the SME policy review conducted in this document. A description of the macroeconomic environment is followed by an analysis of the structure of, and recent trends in, the SME sector. The size of the SME population has been estimated; the profile of entrepreneurs in the Republic of Moldova is based on data emerging from Labour Force Surveys (LFS). This section is followed by a review of the evolution of the business climate and a presentation of the SME institutional framework and of the various programmes being carried out with the support of the donor community. The chapter concludes with a set of final considerations on the issues faced by SMEs in the Republic of Moldova and the identification of a number of key structural factors that may constrain the development of this sector.
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  Review of SME Policy in the Republic of Moldova
  This section reviews SME policy in the Republic of Moldova according to the ten principles of the Small business Act (SBA). The Small Business Act (SBA), which was developed by the European Commission and was adopted in June 2008, seeks to "guide the conception and implementation" of SME policy (EC, 2008a) for the European Commission as well as for the member states. Such a methodology allows benchmarking of the state of SME policy in the Republic of Moldova against reforms that have been made in the European Union. The OECD is currently conducting a number of regional reviews following a similar framework. Once the results of these assessments are available, comparison with the other economies in the region will also be possible.
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  Focus on Access to Finance and Innovation Policy
  This chapter focuses on two specific issues that particularly affect SME development in the Republic of Moldova: access to finance and innovation policy. The objectives of this detailed review are to further assess the situation, to better understand the structural causes that may affect the performance of SMEs and, where relevant, makes suggestions for reform.
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  Conclusion: Key Findings and Priorities for SME Policy Reform
  This report provides a comprehensive assessment of the status of SME policy development and implementation in the Republic of Moldova. In order to facilitate international comparison, it reviews the various aspects of SME policy according to the set of principles defined by the Small Business Act of the EU. The objective of this report is to define the key policy priorities for the next two years (2011-13) and to propose an indicative plan of action for the consideration of the Government of the Republic of Moldova and the SME policy community.
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