Shifting Patterns of Foreign Investment in Moldova

Abstract

This paper examines the evolution of foreign direct investment (FDI) in Moldova from 2014 to 2023, focusing on how small, vulnerable economies adapt to overlapping crises and institutional reform. Using ten years of sector-disaggregated data from the National Bank of Moldova, National Bureau of Statistics, and international institutions (IMF, OECD), the study addresses three questions: How has Moldova’s FDI composition changed? Which sectors gained or lost strategic relevance? And how has investor trust evolved through uncertainty? A mixed-methods design combines longitudinal analysis, reinvestment ratios, and a custom volatility index. Findings reveal a shift from traditional sectors such as agriculture and manufacturing toward ICT and logistics, especially after 2018. Investor confidence improved, as seen in rising reinvestment – up from 21% to nearly 39%. External shocks like the banking crisis, COVID-19, and the Ukraine war, rather than stalling FDI, catalyzed sectoral realignments. Moldova’s reforms, such as digital infrastructure and tax modernization, enabled strategic repositioning, particularly for nearshoring investors. The conclusions suggest that even small economies can strengthen FDI profiles through targeted institutional improvements and adaptive capacity. The paper offers insights for policymakers navigating volatile capital flows. Future research should examine subnational disparities and firm-level behaviors to enrich understanding of resilience mechanisms. JEL Code: F21; F23; O52; L16; P33; UDC: |339.727.22(478)