1. Basic facts about Moldova [1]

The Republic of Moldova is a new independent European state, which was created in the result of the disintegration of the former Soviet Union. It is situated in the South-East part of the European continent at the latitude of 47° between Romania and the Ukraine in the basin of the rivers Prut and Nistru. The Moldova area is of 33,8 thousand km², the territory of the country from the North to the South is 350 km and from the West to the East-150 km. The country population is approximately 4,3 mln inhabitants; the population density of 127 people/km² is one of the highest in Europe. The quota of the urban population is 47 %, Kishinau is the capital with about 700 thousand inhabitants.

The independence was proclaimed at August 27, 1991. The Republic of Moldova is a member of the United Nations, of the European Council and of the OSCE. Personal rights and freedoms are ensured according to the United Nations Universal Declaration of Human Rights. The Constitution of Moldova approved by the National Parliament on July 29, 1994 defines Moldova as a sovereign, neutral and democratic country. The President is the head of the state and the Parliament is the legislative authority.

Moldova is situated in the seismic Carpatian zone and it is a subject to earthquakes, the maximum intensity of the earthquakes on Moldova territory ranges between 6-8 degree on the Richter scale. The climate in Moldova is temperate-continental, the average annual air temperature across the territory of the republic is +8, +10° C. Winters are short with little snow, the average temperature in January is –3, -5° C, summers are long and warm, the average temperature in July is +20, +25° C. The average annual precipitation is 450mm, but 3 years out of 10 are droughty. The last droughts were in 1994 and 1999.

There are no conventional energy sources in Moldova, 98% of fuel is imported. Now minor depositions of fuel and natural gas are explored, but the subsoil of Moldova contains some non-metallic deposits such as limestone, sands, clays, diatomites and others.

The conception of transition from the intensive development, characteristic for the second half of the XX century, to the sustainable one, being in essence an alternative to the intensive, was officially proclaimed and sealed by the signatures of the government heads of practically all states of the world at the UN conference on environment and human development in 1992 in Rio de Janeiro.

The conception of “sustainable development” was proposed in 1987 on the United Nations (UN) level and became fundamental for governments and non-governmental organizations. The sustainable development was defined as a development that meets the needs of the present without compromising the ability of future generations to meet their own needs.

As it is pointed out in the UN annual report on human development in 1994 [2]: “The sustainable human development is such a development, that leads not only to an economic growth, but also to a just distribution of its results, restoring the environment, not destroying it, increasing the man’s responsibility, not turning him into a soulless executor. Such a development gives the paramount attention to poor, rising their potentialities and ensuring their participation in making decisions, influencing their life. Such a development is the development for people, for growing the number of working places and improving the woman’s status in the society”.

The UN annual reports on human development appeared, in which a huge statistical material has been gathered and the showings themselves are not examined separately but in the united complex, it became possible to determine more or less accurately the rating of every country in the world. The Human Development Index (HDI) is the basic quantitative showing, characterizing the level of a given state development and its dynamics. The HDI, developed by UNDP to provide a way of measuring and comparing the level of human development, is based on three key elements: the health of the people, which is determined by the longevity, the educational attainment and standard of living. The educational attainment is calculated as an arithmetic average of the adult literacy rate (two-third weight) and the combined education enrolment ratio (one-third weight). The real Gross Domestic Product (GDP) per capita is used to measure the standard of living of the population.

Let us consider, for example, the calculation of HDI for the Republic of Moldova in 1996[1]:

According to the methodology employed in Human Development Report (HDR). [3], each component is compared with the fixed minimum and maximum values established by UNDP: 25 and 85 years respectively for life expectancy; 0 and 100% for the literacy rate, USD 100 and USD 40000 for the real GDP per capita. The levels of the real GDP per capita in excess of the world average (USD 5835) are adjusted according to a descending scale. For Moldova with the real GDP per capita of USD 2122 in 1996 the value does not have to be adjusted. For each component the difference between the actual and the minimum value is divided by the difference between the maximum and minimum values. In this way, the following indices are obtained:

Life expectancy index:

Literacy index:

Enrolment in the education system index:

Educational attainment index, calculated on the basis of the two above indexes:

Index of the real GDP per capita:

The HDI, which is calculated as a simple average of the three key elements, is therefore:

It is seen that the basic contribution into the value of the HDI for Moldova is given by the educational attainment index, whereas the index of the real GDP per capita is very low. The described calculation method was changed in 1999, however we used the former calculation method, permitting to follow the dynamics of HDI alteration during the nineties.

Any society or state must have corresponding reference-points of its development. Working out quantitative showings of a society social and economic development, HDI being the principal one, permits to determine more or less accurately the place of a given country in the world hierarchy and follow its development dynamics, find the basic priorities.

HDI values and their components for a number of states according to the data for 1988 [4] are presented in Table 3.1. GDP rating and HDI rating difference values are presented in the last column. Positive value of this quantity is the evidence of the HDI rating to be higher than the real GDP rating per capita.

According to the UN classification all the countries - UN members are subdivided into three groups, proceeding from their HDI quantity: countries with high HDI, larger than 0,8; medium HDI (0,5< HDI< 0,8) and low (HDI< 0,5). As it is seen from the table among the countries with the transitional economy only Slovenia, Czechia, Slovakia, Hungary and Poland belong to the category with HDI> 0,8. The USSR belonged also to the countries with a high HDI value, however after its disintegration the states of the former Soviet Union passed into the category with the medium HDI level.

Correlation between HDI and the traditional macroeconomic showing GDP is presented in Fig. 1 [4]. Circles in this figure demonstrate the countries with the transitional economics from East Europe and the former Soviet Union.

The observable correlation may be described mathematically by the exponential dependency:

(1)

where: y - the value of HDI;

x - real GDP per capita;

a, b, c - factors. For the given case a = 0,78; b = 1,17; c = 0,34.

Equation (1) presents only one of possible functional dependencies, describing the correlation HDI-GDP, however it contains less number of factors. This equation shows, that the general correlation is a difference of two members: member ab independent on GDP (straight line in Fig.1 for the countries with high value of GDP) and exponential member, describing the dependency HDI on GDP for the average and low level of GDP (< 6 thousand USD).

It is necessary to note, that countries with transitional economics, including Moldova, are situated near the curve bend, on the upper boundary of the considered correlation, i.e. they seem to be in the number of states “in the best way processing their material wealth into the final product - the indices of human development”. However it is not so, and the position of these countries on the given correlation dependency is determined by the

Fig.1. Correlation between HDI and GDP per capita.

fact that life expectancy index and literacy index are substantially higher than their economic level, determined by GDP index (Table 3.1). The table also shows, that for the examined group of countries the difference of ratings GDP and HDI is a positive quantity in all cases, i.e. for them the level of indices of their human development is considerably higher than their material wealth. Table 3.2, presenting data for each HDI component, is also the illustration of this notion.

This table shows that for the first group consisting of 20 states all the indices are high. For the second group of states, including Moldova, the first two components of HDI exceed substantially GDP index, the mean value of which is set too high owing to the contribution of a number of countries (Czechia, Slovenia, Hungary, Poland, Slovakia) with a high GDP index. The most part of the former Soviet Union excluding Russia, Belorus and the Baltic states have the index GDP< 0,5, permitting to consider them countries with low level of their economics development.

So for the majority of states with the transitional economics, including Moldova, taking into account its economic showings, the economic security is the principal limiting factor in achieving high level in human development under the condition of preservation even at the former level of other indices.

For the majority of countries with the transitional economics, including Moldova, economical security is the principal limiting factor in achieving high showings in human development. As it is seen from Table 3.2 these states may be considered countries with non-balanced ties human development - economical state of the society (relatively high indices of life duration and inhabitant education at low level of economics development). The analysis of social and economic processes taking place in the considered group of states shows that for these countries, with the rare exception, reducing HDI is characteristic. HDI change dynamics for Moldova is presented in Fig. 2 as an example.

Fig.3. The changes of HDI and GDP after the data of HD report 94 and HD report 98. In brackets are indicated the values of rating decrease during 94-98.

As it is seen, for all the countries the decreasing of their rating in the general “hierarchy” according to HDI quantity is observed (the rating decrease values are shown in brackets), even in spite of some increase of the integral index for several countries (Romania, Poland, Czechia). Maximum decrease of HDI for the above-mentioned period has such countries as Latvia, Lithuania, the Ukraine, Armenia. These countries went down in the HDI rating nearly by 50 places, Moldova - by 38 places.

GDP changes for these states are presented by points in Fig. 3. As it has been noted the change of human development index for all countries is determined by the alteration of their economic showings. For such states as Latvia, Georgia, Azerbaijan, Moldova, Tajikistan their GDP in 1995 reached only approximately 40% GDP in 1991.

A sharp deterioration of economic showings for the majority of countries of the considered group takes place against the background of a substantial increase of the income distribution irregularity, defined by Ginni coefficient. The higher is Ginni coefficient, the greater is inequality degree. As Table 4.1 [5] data show in all the countries of Eastern Europe and of the former Soviet Union this coefficient grows. The maximum absolute value of Ginni coefficient in 1996 is in Russia, where it is equal to 0,483. However the growth of income irregularity is different for various groups of states according to the values of human development index. If for the countries with high level of HDI it is 34± 5% (taking 1989 showings as initial ones), than for the countries with medium HDI the corresponding growth is 1,7 times greater (Macedonia being the exception). For Moldova it is observed the increase of income irregularity of the order of a medium showing for states with HDI average value. The maximum growth was in 1992-1993, then there was some decrease, although in 1995 the income distribution irregularity is 57% higher then in 1989.

It should be noted that giving up the centralized planning system must lead to changes in differences of wages in various professions, which before were distorted from the point of view of market economy. However in the transitional period research workers and engineers, doctors, teachers, etc., receiving their wages, traditionally small in comparison with that in the West, from the state budget haven’t won, they even have lost.

It is evident, the substantial worsening of the human development index and also of social and economic showings, characteristic for the majority of states of the Eastern Europe and the former Soviet Union for the period under consideration is the consequence of the economic crisis, on one hand, and, on the other hand, often of unreasoned and unfounded transition to “neo-liberal” model of development. And the transition, based on the model of sustainable development, which is in essence an alternative to “neo-liberal” one, has been ignored.

For rising HDI and transition to a sustainable development it is necessary to solve two problems: to increase GDP, and longevity and literacy index also. The first problem is mostly an economic one, as for the second, it to more extent depends on human factor. It is all the more important as according to the World Bank estimate 64% of any country wealth consists in the human factor, 20% - in natural one and 16% - in physical [7].

In Moldova case, a country with a high density of population and poor natural resources, literacy index being rather high, the role of the human factor is extremely significant. At the borderline of the new millennium the importance of the intellectual resource of the country, including obtaining new knowledge, i.e. science, distribution of this knowledge through the system of education, and also the application of this knowledge in production, is continually growing.

In the industrial society the level of its development was determined by the level of production and consumption of power. At present in post-industrial society the intellectual potential of the society determines the degree of its material wealth, the society development degree depends on the level of its informatization and scientific potential.

In the third section of this report the correlation between HDI and GDP per capita, which may be approximated by formula:

(1)

was presented.

As it is seen from this figure, for the states with a high level of human development the value of HDI practically doesn’t depend on the value of GDP, whereas for the countries with a medium and low level of development there observed a sharp growth of HDI with the increase of GDP. Transition of one section of this correlation into other is determined by the quantity of the “critical” value of GDP. This value could be determined taking into account, that formula (1) at small ‘x’ passes into linear dependence:

(2)

Then the coordinates of a special bending point is defined by the relation:

(3)

as the value c = 0,34, x » 3,0 thousand USD, that corresponds to the lower point of the transitional region. The upper point of this transitional region is approximately 6,0 thousand USD.

However all these data permit to estimate the behaviour of the system “in average” as a zero-order approximation. At the same GDP different levels of socio-economic development could be reached. So, for example, Poland and Botswana, having practically the same values of GDP ~6,0 thousand USD, have quite different values of HDI: 0,851 and 0,678. While Armenia GDP being 3 times less then Botswana, has higher HDI. The list of such examples can be continued.

All this shows the dependency HDI-GDP not to be simple. Inside this system (economic state of the country - socio-economic status of its citizens) there exist “subsystems”, determining the general behaviour of the system. The processes of economic and human development take place together, but there is no any automatic relation between them. That’s why consider one of the possible subsystems - correlation between the socio-economic level of development of the society and its scientific development.

One of the main showings of research work effectiveness is the number of scientific publications, which could be estimated through the analysis of citation according to the journal “Science citation index”, being published in the USA. In Table 5.1 the data, characterizing information streams according to SCI data for 1994 [6], are presented.

Table 5.1. Contribution to the world information process (first 30 countries) [5]

Rating according to HDI and GDP per capita is presented in the same table too. In [7] for the countries, marked by stars, the average values of Ki for a certain group of states are listed. Therefore we use for the republics of the former USSR more accurate data with the account of the scientific expert examination results [8,9]. Two stars in Table 5.2 mark the countries, for which such a correction has been carried out. It should be noted that the conducted specification didn’t change cardinally the rating of the countries according to SDI. So, for example, the corrected SDI for Moldova: 0,22 instead of 0,30 leads to the transition from the 50^th place in the rating to the 54^th one. The analysis of the obtained results permits to subdivide all countries into four groups: countries with high level of scientific development (SDI> 1), with medium level (0,1< SDI< 1), with low level (SDI< 0,1) and with zero level. Not only poor countries fall into the last category, but also rich ones, which don’t develop their own science. In Table 5.2 only states with high and medium level of development are presented. The third group includes such countries as Mongolia, Bolivia, Guatemala, Honduras, Nigeria, Kenya, Iran, Iraq, etc. (SDI - 0,04-0,09). Afghanistan, Qatar, etc. are the examples of countries with zero development. Among the states of the former USSR only Russia is included into the first group, all the others - into the second one. It should be noted also, that the conclusions concern the level of 1994, and these data could change to the worst, taking into account deterioration of socio-economic situation in the republics of the former USSR, marked above in Section 4.

In Table 5.3 the comparison of ratings of SDI, HDI and GDP according to the data for 1994 for the states of the former USSR is presented.

As appears from the data, adduced in Tables 5.2 and 5.3, a close interrelation between the indices HDI and SDI in all cases is observed. So, for example, among 20 countries with the highest rating SDI 18 ones are included into the number of twenty states, possessing the most high value of HDI, and Italy, the 20^th in SDI rating, is the 22^nd in HDI rating for the same period.

However a large time lag of “damping” of scientific development means the larger delay at the scientific development level growing. Restoration of the intellectual potential, necessary for sustainable development in XXI century, if it disappear, will demand dozens years.

The quantity of military expenses, determined by the portion of military expenses in per cents to GDP, is a very important index, which human development depends on. In Table 5.4 the data, showing the interaction between the indices of economic and human development for the countries with the highest indices of military expenses - more than 9% of GDP, are presented. It is seen that the role of military expenses is of two kinds. For the countries with a high level of scientific development (Russia, Israel) big military expenses lead to the positive difference between GDP rating and HDI rating. For the countries with medium and low level of scientific development a large portion of military expenses influences negatively the human development level (D = -39± 13). North Korea is exclusion (26,6% of GDP), where science is a closed sphere. The investigators of this country don’t participate in the world information process, therefore SDI rating is absent.