After a slow start in the early 1990s, Pridnestrovie's economy has taken off and small businesses is springing up all over the country. The number of people engaged in private business has grown to more than 23,000 at last count, with over 3,000 registered companies operating in the republic and almost 9,000 individual entrepreneurs.

These are big numbers for a small country. They reveal that the dedication to a market-based economy is paying off and that, relatively speaking, Pridnestrovie's economy is booming. In recent years, the functions of the state administration changed radically. The sphere of the direct, centralized government has narrowed, at the same time that the regulatory framework for foreign economic activity was modernized and liberalized: Now, a revised code on contracts lets any company establish open relations with foreign counterparts in any way that are profitable for both parties.

The result? A marked improvement in main macroeconomic indicators from 2000 to 2005. Overall GDP increased 209.6% in 5 years, with the per capita GDP experiencing an increase of 223.0% over 5 years! In the same period, the per capita labor productivity index went from USD $970 in 2000 to $2,655 in 2005.

Foreign trade is an important element of Pridnestrovie's economy. The country has a small home market but makes up for that by a strong focus on exports. Thanks to hard work in the face of adversity, Pridnestrovie's businesses managed to not only hold on to the export base accumulated during pre-independence but also expand and grow the exports of the republic, penetrating into new world markets and obtaining record growth numbers for the economy. Annual foreign trade turnover of Pridnestrovskaia Moldavskaia Respublica grew from $650 million at the time of independence in 1990 to $1.3 billon in 2005.

Can the Asian miracle of small entrepreneurship be replicated in this new corner of Europe? This is what some people think, and the story of Intercentre Llux gives them hope. Intercentre Llux was started on a shoestring by Anatoly Dzernovich. Formerly the director of a state textile plant employing 7,000 workers, in 1992 Dzernovich humbly started to build his new company from a 12-square-metre basement room and a handful of women using their own sewing machines. A decade of hard work later his company produced nearly a thousand different products, exporting 80% of production to Europe under seriously difficult conditions. Intercentre Llux employs about 750 people (among Pridnestrovie’s largest firms, Tirotex employs 7,000, Elektromash 3,000, and Moldavizalit 2,000) and produces clothing as well as a range of food products. Mr. Dzernovich is rightly proud of his “Arch of Europe” award which he received from the European Union for quality and technology.

Dzernovich says that there is a moderate level of unemployment in Pridnestrovie; far less than in poor Moldova on the other side of the border. Even though the state operates a special system that sends the unemployed to local companies to work, he claimed that he was not able to find the additional 15 workers he currently required. With reference to Moldova's claims on Pridnestrovie's independence, he described this as a “threat to our business.” He said his partners in France, Holland and Germany were “very worried about the situation in Moldova.”

Even so, Western Europe keeps investing in Pridnestrovie. In August 2003 a Western European company bought a 15.6% stake in the country's Rybnitsa-based steel company, 2/3 of the shares of which were owned by ITERA, a Russia gas concern. A year later, ITERA sold its controlling stake in the Rybnitsa steel company to the Austrian-based Hares Group. Also in 2004, the Cuciurgan Hydroelectric Plant was sold to a mostly Belgian company. In 2005, a record inflow of German capital arrived to fund nearly a dozen different companies in Pridnestrovie. The numbers for 2006 are not yet in — but of the 130 privatizations [0] on the block, at least 2/3rds are expected to end up with European Union ownership.

At one of Pridnestrovie's privately owned telecommunications companies, InterDnestrCom, director Sergei Ganzha explains that everything which is done in Pridnestrovie is done by the Pridnestrovians themselves, without any help at all from Moldova whatsoever. Mr. Ganzha explains that the Moldovan state monopoly telecom concern, Moldtelecom, has not invested in Pridnestrovie at all, leading the Pridnestrovians to establish their own telecommunications companies in the form of InterDnestrCom and TransTelecom (and in addition, certain municipalities in the PMR operate their own free networks, too).

The success of the private telecommunications sector in Pridnestrovie attracted a US firm, Lucent Technologies, to invest in Pridnestrovie [0] for one of its first-ever projects in Europe.
But with the success also came envy and retaliation from those anti-independence agitators.
The success of private telecommunications companies in Pridnestrovie led the state-run monopoly in Moldova to interfere. Under orders from the Communist-run government in Moldova, Moldtelecom started sabotaging the Pridnestrovie's right to free expression by simultaneously blocking calls to its territory from the two Moldovan mobile companies, Voxtel and Moldcell, and by blocking calls to Moldova out of Pridnestrovie.
Prior to that, Moldova had refused to pay Pridnestrovie for trunk traffic through Pridnestrovie's fixed-line network even though Moldtelecom had already taken payment for it from international customers on Pridnestrovie's behalf.

According to the latest data from the nation's Customs, Pridnestrovie now trades with 99 foreign countries. Of these, the main trading partners are the USA, Germany, Russia, Ukraine, Moldova, Belarus, Switzerland, Italy, Romania, Great Britain, Poland, Cyprus, and Turkey. On a per capita basis, average annual foreign trade turnover exceeded $2,000 for the first time in 2004. This is a level which is unsurpassed in the post-Soviet economies and is only matched by European nations like Greece or Portugal.

These record results are possible because products from Pridnestrovie combine competitive prices with high quality. Several companies in Pridnestrovie meet ISO-9000 international quality standards. And quality is not the only field where Pridnestrovie stands out. In the area of environmental protection (ISO series 14000), the government has partnered with local companies to meet these standards, too.

Pridnestrovie's government has a good relationship with the Spanish power company Union Fenosa, which currently buys electricity from Pridnestrovie and sells it to Moldova. Among other things, Fenosa pays its bills ... unlike the Moldovan government, which owes Pridnestrovie $37M.

The country's president is supporting the market liberalization and seeks to integrate Pridnestrovie closer with the rest of the world's economy:
" - It’s necessary to provide maximum integration of Pridnestrovie to the global economic space. Our active interaction is determined by the necessity of integration of Pridnestrovie into the world democratic community."

In 2004, Pridnestrovie's small but active stockmarket opened. The "Pridnestrovskaya Stock Market" was created with the participation of the Chamber of Commerce & Industry of Pridnestrovie and leading banks in the country.

Showing how Pridnestrovie is forging closer ties to other nations, the local economy is becoming increasingly more globalized. Based on the latest numbers available, from 2005, the share of companies with foreign investments grew to 53.4% of the total number of private companies. This shows the pro-Western orientation of the country's economy. It is hard to find a more clearer statement of the Pridnestrovian commitment to a free and open market based economy.

WHAT'S RELATED: Open trade with EU, US [0] Economic success: High growth, low inflation [1] Money, Pridnestrovie's own Rouble [1] The right way to privatize: Putting people first [2] more... [3]