recommendations
for Moldova were prepared and presented in this article.
Keywords: digitalization;
manufacturing; Moldova, competitiveness
1.
INTRODUCTION
Moldova
is a small lower-middle income economy. It is one of the poorest countries in
Europe. Moldova has made significant progress in promoting inclusive growth and
reducing poverty and since the early 2000s. Global Competitiveness Index report
covering 141 economies measures national competitiveness—defined as the set of
institutions, policies, and factors determining the level of productivity.
Moldova was also ranked 86th (The Global Competitiveness Index 4.0 rankings
report, 2019).
The majority of the entrepreneurs recognize that digital
transformation is an excellent opportunity for development and competitiveness
(Ślusarczyk, 2018). The strengthening of digitalization processes puts
additional competitiveness pressures on manufacturing businesses. Although
digital transformation is a new concept in manufacturing (Okano, 2021), to
maintain competitiveness, steps towards the digitalization of industry have to
be implemented.
2.
LITERATURE REVIEW
2.1.
The concept of digital transformation
Digital transformation can be defined as changes in jobs and
income creation strategies, applying a flexible management model standing
against the competition, quickly meeting changing demands. It is a process of
reinventing a business to digitalize operations and formulate extended supply
chain relationships. Practical use of the internet in design, manufacturing,
marketing, selling, presenting, and data-based management model (Schallmo,
2018).
The authors highlight the importance of digitization in
the manufacturing sector and claim that companies need to implement the latest
technology (Wang, 2016).
The digital
transformation process requires companies to transform every day and be concerned
with items such as customers, business models, new technologies, agile methods,
and innovations (Okano, 2021). Considering that technologies have been
completely changing the industry and digital transformation is expected to have
a vast impact on almost any industry, digitalization can bring new
opportunities for SMEs by improving the entire value chain (Kilimis, 2019). Digitization
strengthens the potential for quality improvement, flexibility, and
productivity (Hoellthaler & Braunreuther, 2018).
Digital transformation is adopting disruptive
technologies to increase productivity, value creation, and social well-being
(Duarte, 2018).
Ulas (2019) had identified several factors expediting
digital transformation that include, among others, globalization, advancement
of technology and innovation, electronic commerce, and social media. Experts highlight four areas where
digitization technologies have the most significant impact: productivity,
revenue growth, employment, and investment (Russmann, 2015) (Table 1).
Table
1: Impact of digitization on German macroeconomics
|
Area
|
Scale
|
|
Productivity
|
More and
more companies will have to deploy digital technologies over the next ten
years, increasing the productivity of the manufacturing sector.
|
|
Income
|
The demand
for new products, new personalized products will increase revenue growth.
|
|
Employment
|
Production
growth will increase employment by around 6%. The demand for engineering in
the engineering sector will increase by 10%. Accelerating automation will replace
low-skilled workers. The growing demand for IT skills will increase the
demand for employees with competencies in the IT sector.
|
|
Investment
|
By
adapting production processes to Industry 4.0 trends, German manufacturing
companies should invest around €250 billion.
|
Source:
based on Russmann, 2015
Digitization will make a significant impact on
manufacturing companies, workforce, and companies supplying new manufacturing
systems.
2.2.
Country competitiveness definition
According to Leão de Miranda (2021), the term
competitiveness has historically been used to relate companies and nations in
terms of costs. Analyzing the concept of competitiveness, most experts agree
that competitiveness is a highly complex and multi-faceting phenomenon, as is
the competition itself, the evaluation of which requires considering the
results achieved in various areas. The concept of competitiveness begins with
trade theory (Smith, 1937).
Porter (1990) first introduced the idea of competitive
advantage. Competition based on innovation, according to Porter (1980), is the
highest stage in the development of the competitiveness of the country's
economy, characterized not only by the application and improvement of foreign
equipment and technology", but also by "the creation of new examples,
creative development of the product range, production processes, sales
organization system."
Porter (2012) identifies four stages of the competitiveness of the
national economy, corresponding to four main drivers of its development:
factors of production, investment, innovation, and wealth. At the same time,
the first three stages are characterized by an increase in the competitiveness
of the country's economy.
Krugman's (1994) position on the country's competitiveness
is based on Ricardo's classic theory (particularly the theory of comparative
superiority).
According to Krugman (1994), only companies trade and
compete. International trade allows companies to develop a division of labor
and enables the growth of the economies of all countries. Analyzing the concept
of the country's competitiveness (Rakauskienė, 2013) distinguishes three
approaches:
·
The country's competitiveness is a successful
foreign trade of the country;
· The country's
competitiveness is the productivity of the country;
· The country's
competitiveness is the ability to ensure the well-being of the country's
population.
A broad notion of competitiveness refers to the
inclination and skills to compete, win and retain a market position, increase
market share and profitability, and eventually consolidate commercially
successful activities (Filó, 2007).
The model of systemic competitiveness of Esser (2007) is
suitable for analyzing competitiveness. According to it, the country's
competitiveness consists of four levels:
a) Meta-economic level:
socio-cultural factors; value system; the country's political-economic clout;
capacity to formulate strategies and policies;
b) Macroeconomic level:
budgetary policy; monetary policy; fiscal policy; competition policy; trade
policy;
c) Meza economic level:
infrastructure policy; educational policy; industrial policy; environmental
policy; regional policy; import and export policy;
d) Microeconomic level:
management competence; company strategy.
The World Economic Forum (WEF) produces one of the
best-known competitiveness indices – the Global Competitiveness Index (GCI,
2019). The national economy competitiveness reflects the state of its
institutions, policies, and factors that determine the productivity level of
the economy, its growth level, and the prosperity level achievable for a
particular country (World Economic Forum, 2017).
Under conditions of intense business globalization,
pronounced competition, dramatic demographics (Marinović, 2017), economic
and technological changes, country economy competitiveness is gaining
importance. The WEF definition links micro- (firm-level) to macro-
(country-level) competitiveness.
The WEF's national competitiveness assessment is based on
the Global Competitiveness Index (2019), which comprises several indicators
measuring certain aspects of competitiveness, grouped into composite factors in
terms of content, which form 12 groups of competitiveness factors (Table 2).
Table 2: The content of the Global Competitiveness
Index
|
Groups of Factors
|
Factors
|
|
Institutions
|
Public
institutions (property rights; ethics and corruption; abuse of influence;
government efficiency; security); private institutions (corporate ethics,
accountability)
|
|
Infrastructure
|
Transport
infrastructure; electricity and telephony infrastructure
|
|
Macroeconomic environment
|
|
Good health and primary education
|
Health; primary
education
|
|
Higher education and
training
|
Scope of
education, quality of education, staff training
|
|
Product market
efficiency
|
Competitiveness (internal competition; foreign
competition); quality of demand conditions
|
|
Labour market
efficiency
|
Flexibility; efficient use of talents
|
|
Growth of financial markets
|
Efficiency; reliance, loyalty
|
|
Ability to harness progressing technology
|
Technology uptake; the use of ITT
|
|
Market size
|
Local market size; foreign market size
|
|
Business literacy
|
|
Innovation
|
Global Competitiveness Index
report (2019) covering 141 economies measures national competitiveness-defined
as a set of policies, institutions, and factors that determine the level of
productivity. Moldova
was also ranked 86th.
The
research objects of researchers studying competitiveness are different.
Therefore, the analyzed and described factors of competitiveness are
different. As a reason, there is no
single and universally accepted methodology for assessing the country's
competitiveness. Competitiveness is a set
of factors, institutions, and policies that determine the level of
productivity.
2.3.
Digital country competitiveness
The
Institute for Management Development (IMD, 2017), an independent academic institution
with Swiss roots and global reach, started the World Digital Competitiveness
measuring (2017).
Based
on IMD, World Digital Competitiveness (WDC, 2017) analyzes and ranks to which
extent countries adopt and explore digital technologies leading to
transformation in government practices, business models, and society.
IMD
World Digital Competitiveness Ranking measures the capacity and readiness of 63
economies to adopt and explore digital technologies as a critical driver for
economic transformation in business, government, and broader society.
Based
on institute research, the methodology of the WDC ranking defines digital
competitiveness into three main factors: knowledge, technology,
future-readiness. Moldova was not included in the digital latter ranking.
2.4.
General situation of Moldova
Business
confidence in Moldova is low, while the macroeconomic framework remains
vulnerable. Transparency, accountability, and corruption are crucial concerns
and external budget support, which is based on an agreement with the
International Monetary Fund, has a high level of conditionality. To improve
this situation, the Moldova government must carry out critical economic reforms
and create a rule-based, effective and accountable environment for businesses.
However, the recent election of Parliament shows that country is split between
pro-Russian and pro-European political powers. However, neither of these groups
didn't gain the majority, which puts the country in a situation of political
instability.
Moldova's
large-scale emigration combined with decreasing fertility rates deserves
particular attention. It has led to an alarming decline in the population and accelerated the aging
of society. Around 15% or 500 000 of the country's population live outside
Moldova. It puts pressure on the pension system and the country's long-term
competitiveness.
2.5.
Statistics of Moldova GDP
The
influence of the industry sector on Moldova's GDP is around 15%. Industry
sector in Moldova consist of mining and quarrying (B); manufacturing industry
(C); production and distribution of electricity and heat, gas, hot water and
air conditioning (D); distribution of water, sanitation, waste management,
decontamination activities (D).
The
distribution and influence of these segments on Moldova GDP can be seen in
Table 3 (Statbank, 2020).
According
to the statistics department of Moldova, the industry sector was on the rise during
the period of 2014-2015 and started to decrease from 2016 to 2019 (Statbank,
2020).
Out
of four segments, manufacturing is by far the most significant sector, and it
saw the most significant increase over the period of 2014-2019.
Sectors
D and E showed an upward trend. However, it wasn't substantial compared to
manufacturing. Last but not least, the Mining and quarrying sector remains the
same.
Table 3: Contribution
of economic activities in the GDP formation, %
|
Year
|
2014
|
2015
|
2016
|
2017
|
2018
|
2019
|
|
(B)
Mining and quarrying
|
0.3%
|
0.3%
|
0.2%
|
0.2%
|
0.2%
|
0.3%
|
|
(C)
Manufacturing
|
11.6%
|
12%
|
11.9%
|
11.6%
|
11.2%
|
10.6%
|
|
(D)
Production and distribution of electricity and heat, gas, hot water and air
conditioning
|
2.5%
|
2.5%
|
2.5%
|
2.4%
|
2.5%
|
2.3%
|
|
(E)
Distribution of water, sanitation, waste management, decontamination
activities
|
0.8%
|
0.8%
|
0.8%
|
0.8%
|
0.8%
|
0.8%
|
The
volume of industrial production indicates annual growth in this sector (Table
4). Since 2010, industrial production has increased by 40,7%. This pattern is
evident in the manufacturing segment, which, compared to 2010, rose by 52.2%.
The mining and quarrying sector reached its highest point in 2011. Since then,
there is no general pattern that could define this sector's growth dynamics.
The
amount of production during 2018 reached the volume of 2010. Last but not
least, production output in electricity and heat, gas, hot water, and air
conditioning segment increased by 7,5%. There is no statistical information
about water, sanitation, waste management, decontamination segment (Statbank,
2021).
Table 4: Volume indices of industrial
production, 2010=100%
|
Year
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
2018
|
2019
|
2020
|
|
Industry
- total
|
113.4
|
110.7
|
120.2
|
129.0
|
129.9
|
131.1
|
135.6
|
140.7
|
143.7
|
135.5
|
|
(B)
Mining and quarrying
|
127.2
|
100.3
|
122.6
|
122.9
|
111.6
|
94.3
|
90.2
|
100.3
|
97.4
|
107.3
|
|
(C)
Manufacturing
|
113.9
|
113.2
|
125.2
|
135.9
|
139.0
|
141.5
|
148.1
|
152.2
|
157.1
|
145.8
|
|
(D)
Production and distribution of electricity and heat, gas, hot water and air
conditioning
|
98.1
|
99.0
|
94.8
|
99.0
|
100.1
|
99.2
|
97.9
|
105.6
|
100.4
|
102.1
|
The
main factors which led to the growth of the industrial sector are: the
expansion of the foreign investor's activities, especially in the automotive
industry, the positive developments in the agricultural sector that stimulated
the growth of the food industry, the increase of domestic and foreign demand
for national industrial products, due to the opening of the foreign and the
implementation of the international economic cooperation agreements.
Industry
sector production output is rising; however, this sector's amount of labour
force is relatively stable (Table 5). Compared to the entire country, the share
of employees in the industry is relatively stable – around 12%. Even though the
number of employees was regular, monthly average earnings rose during the last
five years (Statbank, 2021).
Compared
to the entire Moldova economy, wages in the industry sector are more
significant. However, this industry sector average is distorted by Electricity,
gas, steam, and air conditioning supply segment (D).
In
general, production output is rising, but the fact that industry is dominated
by resources-intensive and low-medium tech companies combined with increasing
labour costs means that the Moldova industry sector's competitiveness could have competitiveness-related
issues.
Table 5: Employed
population
|
Year
|
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
2018
|
2019
|
|
Industry % of total
|
18,64
|
18,75
|
19,28
|
17,69
|
17,90
|
17,85
|
17,14
|
16,65
|
19,40
|
21,71
|
Despite its growth and importance to the
country's economic performance, the manufacturing sector has to improve.
The
structure of the manufacturing segment is dominated by resource-based
businesses, which account for almost half of manufacturing companies (45.2%).
Low-tech and medium-tech manufacturing companies account respectively 26.1% and
25.2%.
The
share of high-tech companies is extremely low and makes up only 3.5% of all
manufacturing businesses (Competitive Industrial Performance Index, 2020).
Finally,
the manufacturing sector composition is mainly dominated by food and beverages
production. This segment accounts for 40.4% of all manufacturing production.
The other four most significant segments are wearing apparel, fur (10.9%);
non-metallic mineral products (9.4%).
2.5.1. Business structure
Data
of 2016 shows a total of 51,600 SMEs in Moldova or 98.7% of total registered
enterprises (Table 6). 20,300 or almost 40% of the total number of SMEs are
active in the wholesale and retail trade. The second largest category
represented by SMEs is the "other" with manufacturing and
professional services, scientific and technical activities representing the
third largest category with an equal amount of 4,400 SMEs each (or 8.5% of the
total number of SMEs).
SMEs
sector in 2016 employed 313,500 employees or 61.2% of the entire workforce.
However, it should be noted that micro-enterprise is the most significant
segment in SMEs structure and makes up 85.1% of it. Despite that, a number of
employees in the SMEs segment are distributed relatively equally. Small and
medium-size enterprises contribute a total of 31.4% of GDP in Moldova.
In
terms of income, SMEs have generated a total of nearly €2.5 billion in 2016.
The main contributing sectors are wholesale and retail trade with approximately
49% and manufacturing industry with approximately 11%.
Table 6: Indicators related to the SME activity
in 2016
|
Indicator
|
Number
of units, thousand
|
Percentage
of total in RM %
|
Number
of people, thousand
|
Percentage
of total in RM %
|
|
Total
SMEs of which:
|
51.6
|
98.7
|
331.5
|
61.2
|
|
Medium-sized
enterprises
|
1.3
|
2.5
|
101.5
|
19.8
|
|
Small
enterprises
|
5.8
|
11.0
|
107.2
|
20.9
|
|
Micro
enterprises
|
44.5
|
85.1
|
104.8
|
20.5
|
2.5.2.
Local ecosystem
Moldovan
government structure in relation to industry digitisation together with
research and development is quite broad. The development of the R&D system
of Moldova underwent different phases and was administered by a number of
government departments and institutions, however, since 2004, this role is
dedicated to the Moldovan Academy of Sciences (ASM). The Academy is the main
policy-making institution and fulfills, to a large extent, the role of a
Ministry of Science.
The
president of ASM is a member of the Government. It is an elected eminent
national scientist who enjoys full independence from political views. ASM works
as the research policy-making body, it manages most of the public R&D
funds, and is the main research performing institution in the country. However,
various experts emphasize that this situation results in a clear institutional
conflict of interest since it places ASM as a policy-maker and funding agency
while being at the same time the major beneficiary of the research funds.
Besides
Moldovan Academy of Science, there are also Moldovan ministries, which are
directly involved in the management of research and innovation policy/or
funding. The Ministry of Finance defines the allocation of government resources
for R&I activities. The Ministry of Economy is also involved and deals with
innovation and technology transfers in the business sector.
Ministry
of Environment is responsible for allocation of moderate R&D funding
through its National Environment Fund (FEN). Besides that, Ministry of Health
also disposes several subordinated health research institutions. Last but not
least, Ministry of Education oversees Moldova higher education sector in order
to strengthen the research capacities at universities.
Besides
governmental level, Parliament of Moldova is also involved in R&D affairs.
Within Parliament, the Committees on Culture, Education, Research, Youth, Sport
and Mass-media are responsible for the analysis and improvement of draft acts
related to science and innovation.
Moldovan
Academy of Science and its subordinated bodies are the main stakeholders for
policy implementation. There is a Centre for Fundamental and Applied Research
Funding (CFCFA) within ASM, established in 2012 for the allocation of public
funding for fundamental and applied research and which manages the main
Moldovan funding programs.
Other
institutions are Moldovan Agency for Innovation and Technology Transfer (AITT),
which is funding institution and responsible for supporting innovation and
technology transfer. In addition, the Ministry of Economy also established
Organization for SME sector development (ODIMM), which is responsible to
provide support for SMEs in Moldova.
One
more important agency operating in innovation system is the National Council
for Accreditation and Attestation (CNAA). This organization is highly relevant
for institutions wanting to become eligible for public R&I funding. These
have to undergo an evaluation and accreditation procedure, conducted by the
CNAA.
Accreditation
is granted for a period of up to five years. Under the Code on Science and
Innovation all research organizations accredited by the CNAA become members of
the Academy of Science. There should be noticed a significant difference
between capital Chisinau and the rest of the country in regards to CNAA
activity. During the period of 2005-2013, CNAA accredited 60 organizations, but
only three were situated outside Chisinau.
Last
but not least, it also worth mentioning innovation agencies operating outside
the ASM structure. These are the State Agency on Intellectual Property of the
Republic of Moldova (AGEPI) and the National Environmental Fund (FEN). First
institution takes care of protection of intellectual property and the latter
one manages dedicated research funding under the Ministry of Environment.
Majority
of the entrepreneurs recognize the industry digitalization as a great
opportunity for development and improvement in competitiveness
(Ślusarczyk, 2018). The strengthening of digitalization processes may put
additional competitiveness pressures on manufacturing businesses. In order to
maintain the competitiveness, the industry should step towards the
digitalization.
Digitization
offers the potential for quality improvement, flexibility and productivity
(Hoellthaler & Braunreuther, 2018).
In
order to generate specific steps/recommendations in regard to the digitisation
of Moldova industry, the further analysis have been made.
3.
DATA AND METHODOLOGY
SWOT
Analysis is a decision-making method, and it has been widely used in the
management process. SWOT analysis has successfully been applied in identifying
and solving problems (Mainali, 2011).
SWOT
analysis was applied to evaluate the current situation and future possibilities
for the Moldova industry sector. This method is selected because it can
incorporate the present conditions (through strengths and weaknesses) and the
future conditions (through opportunities and threats).
The
research adopts an expert interview approach to gather information. The main
input for the SWOT analysis was knowledge and information collected through
interviews with relevant experts.
Experts
interviews is a popular method of gathering information in various fields of
political and social science. It can provide insight and valuable knowledge in
the relevant field. It is also considered an efficient and concentrated method
of gathering data, especially in the exploratory phase (Bogner et al., 2009).
Selecting
the relevant experts is essential to gather usable information. The experts
interviewed for this research compose of people who work closely in
digitalization or competitiveness.
Also,
the triple helix approach was used to involve experts from Government,
industry, and academia.
The
list of their qualifications is provided in Table 7.
The
interview was conducted through one-to-one interviews. The responses were
collected from the respondents using a mixture of open-ended and scaled
questions. To provide a quantitative assessment, the respondents were asked to
rank their preferred option using the scale of 1 to 5 (1 - most unsuitable, 5 -
most suitable).
Table 7: Qualifications of experts
|
Respondents
|
Qualifications
|
Field of expertise
|
|
1
|
Digitalisation expert at the governmental public agency with more than 20
years of experience in digitalisation area. Male, 52 years old
|
Government
|
|
2
|
Professor of management of Vilnius Tech University. Male, 35 years old
|
Academic researcher
|
|
3
|
Professor of Economics of Mykolas Romeris University. Femaile, 66 years
old
|
Academic Researcher
|
|
4
|
Coordinator of Digital innovation hub in Lithuania. Female, 41 years old
|
Industry
|
|
5
|
CEO of Science and technology park in Lithuania. Male, 53 years old
|
Academic Researcher
|
|
6
|
CEO of regional business association. Male, 44 years old
|
Industry
|
|
7
|
Innovation manager, digitalisation consultant, with more than 20 years of
experience in digitalisation area. Male, 51 years old.
|
Consultant
|
Source: compiled by the
authors
4.
RESULTS AND DISCUSSIONS
In
terms of its positive qualities (strengths and opportunities), the respondents
emphasise on different aspects of Moldova industry sector
In
order to understand the current situation and future possibilities for Moldova
industry sector, SWOT analysis has to be performed (Table 8).
Table 8: SWOT analysis
|
Strengths
·
Industry sector and
manufacturing segment output is rising;
·
Well-developed,
consistently updated public and private ICT infrastructure;
·
Moldova ranks 6th
worldwide translating its innovation inputs into outputs
·
Digitization
solutions providers can supply a wide range of digitization services (by
increasingly participating in local and global value chains, related to ICT,
robotics, automation, electronics, cyber security, digitization solutions
providers can offer services ranging from standard adaptable services to
specialized services);
·
Moldova ranked 5th in
regards to business friendly environment, according to fDi Manufacturing
Locations of the Future 2018/19 ranking TOP 10 Manufacturing Countries of the
Future 2018/19.
|
Weaknesses:
·
Moldova innovation system consists of many institutions
which whose competences overlap;
·
SMEs still lack appropriate education and entrepreneurial
skills, understanding of HR remains low, digitalization and modernization of
operations are still lagging;
·
Contribution of industry sector to Moldova's GDP is quite
low (~15%);
·
Moldova export is mostly dominated by agricultural goods;
·
The manufacturing sector comprises only ~12% of country's
GDP, which is low. Around 20% is considered to be optimal;
·
Issues in education and research system. Due to difficult
social and economic situation since the country's independence, cuts were
made for education and research which led to very low investments in these
sectors over years;
·
Moldova R&I system presents several structural
weaknesses such as low financing, ageing, migration and downsizing of the
R&D personnel;
·
Country has 31 universities and 45 colleges, however only
4 universities and 6 colleges tech ICT. In 2016 just 823 students graduated
with ICT related qualifications (out of 24,000 graduates);
·
Moldova competitiveness rating is low (According to World
Economic Forum Global Competitiveness Index 4.0 2018 edition, Moldova is 88
out of 140 countries);
·
Moldova ranks poorly on the Corruption Perception Index.
According to Transparency International's Corruption Perception Index 2014,
Moldova ranks 103 on the list of a total 175 countries;
·
Differences between capital Chisinau and the rest of the
country in regards to innovative activities;
·
Moldova manufacturing sector competition is interrupted.
Moldovan manufacturing sector have an oligopolistic or monopolistic market
structure.
·
Industry is dominated by micro and small companies that
do not have an adequate demand or extent for the installation of digitization
technologies (since digitization is more relevant for medium-sized and large
companies);
·
Industry's technological readiness level is low (low- and
medium-tech technological businesses dominate; industry is oriented towards
the employment of used, second-hand manufacturing equipment and cheap labor;
too little comprehension about what equipment is needed, how to optimally
integrate and utilize it; few companies apply real-time analytics
·
There is a lack of systemic integration (the digital
technological equipment companies have is acquired through separate
initiatives and projects; there is a lack of systemic integration that would
ensure a transparent transfer of data as well as horizontal and vertical
integration within companies and in the exchange of data with other creators
of the shared value chain; due to their price, such solutions, although
available on the market, are often hardly financially obtainable for the
local SMEs);
·
The majority of manufacturing companies produce/provide
low added-value products/services
·
Issues with standardization and interoperability of
systems (it is difficult to make different systems compatible and to
integrate them together);
·
Too limited supply of qualified and specialized
innovation support services. There are a lot of "generalists"
amongst intermediation, facilitation and motivation service providers, but
when companies need to solve concrete problems that require deeper,
specialized knowledge, it becomes difficult to find such experts
|
|
Opportunities
· The share of industry sector to Moldova GDP is on the
rise;
·
Various strategic
documents include industry sector as one of the priorities which has to be
developed. However, industry digitization isn't mentioned as a separate
priority
·
Bringing back and
attracting talents from abroad;
·
Vocational training
and retraining of employees;
·
A promising
innovative sector for the country is Information and Communication
Technologies (ICT), which has gained weight similar to that of other CIS
countries;
·
Integration with EU:
Moldova is a member of Eastern Partnership with EU and has an Association Agreement with
European Union signed in 2014. Integration with EU will provide various
advantages and support measures. Country participate in Horizon 2020 and
Smart Specialization Strategy;
· International financial institutions readiness to support
transformation processes;
·
Opportunities for
business to get to know and use more financial support and measures;
·
In 2017 Moldova
launched a number of reforms such as labor code or labor migration, however,
the implementation and the effects of reforms are still unclear;
·
Clusters policy is
present in some policy documents. Moldova is on the right track, understanding the importance of
clustering, however there is a long way to go in regards to the development
of it.
|
Threats
·
The industry
digitization market is, and remains, limited (due to industry domination by
small companies or the state of the economy);
·
Manufacturing
companies are not able to adapt and switch to global business models;
·
Imported digitization
technologies do not have an adequate support (in either projecting,
installation or service) in manufacturing companies due to the lack of
variety of such services and their quality;
·
Shortage of talents
due to migration and flight of human capital ("brain drain")
(internal migration from regions to cities; emigration from Moldova to
foreign countries);
·
Deficit of
professionals due to the current demographic situation;
·
The higher education
institutions are not capable of preparing suitable specialists (due to the
inappropriate digital technologies infrastructure aimed at study; due to
insufficient lecturers’/vocational teachers' qualifications in industry
digitization matters);
·
Inflexible regulation
of work conditions regarding organization and installation of digital
workplaces in companies;
·
A fragmented and
underdeveloped innovation support and innovation consulting services system
that otherwise would make the creation and installation of digital
innovations in industry more effective
|
Source: compiled
by the authors
Based on it, recommendations and measures will be drawn.
4.1.
A
Vision of digitalized Moldova industry
Following
the SWOT, the vision concerning the future of digitalized Moldova manufacturing
sector can be established.
Internal/Company-related factors:
- Moldova is dominated by relatively small, smart and agile factories
manufacturing higher value-added products for niche markets; flexible
organizations can diversify rapidly to meet changing market needs.
- Moldovan capital and foreign capital companies operating in Moldova
are deeply embedded in international value chains through ownership,
production partners and realization markets.
- Moldova is a 'testbed' for new cutting-edge technological solutions
created across Europe, Japan and USA – first deployed in Moldova industry
for demonstration purposes; then, spread across all of Europe. Therefore,
Moldovan solution providers and solution integrators always work with the
latest technologies.
External/Environmental factors:
- Moldova provides access to a variety of specialists that the
industry demands, as required, for digitisation.
- Moldova provides opportunities for lifelong learning, non-formal
education and competence enhancement, through
industry-university/college-cooperation.
- Moldova is a destination of choice for talented professionals from
abroad and international students (who stay and work in Moldova after
their studies).
- Moldova remains in the top European states that continually sustain
a state-of-the-art infrastructure for industry development (accessible
transportation, logistics, and energy in every corner of the country, as
well as ICT appropriate to the 5G network and Industry 4.0).
4.1.1.
Strategic Pillars Supporting the
Vision
Moldova
industry digitisation action plan should be supported
by 4 pillars: Knowledge, People, Infrastructure and Environment.
Each of these foundations encompasses distinct target priorities identified by
experts and addressed by specific policy measures.
Knowledge considers technologies and business models that will become integrated
through value chains.
People refers to policy-makers, researchers and creators, enablers, and
intermediaries that will play a critical role in the digitisation of industry
along the private sector and investors.
Infrastructure regards services infrastructure, demonstration infrastructure, and
R&D infrastructure which, when combined, will provide the best possible
conditions for manufacturing innovation.
Environment concerns the legal and regulatory environment, standards, and
incentives system that will embed industry in a smoothly performing facilitation
network within the local ecosystem.
Strategic
pillars cover areas
that are in most need of action in order to achieve the digitalised industry's
vision (Figure 1).
To
overcome these challenges, digital competences and skills must be developed to
assist companies in creation, adoption and implementation of digital solutions.
By using opportunities provided by digitisation, companies would become enabled
to increase their productivity, production value and to internationalise.
There
are the key measures to accomplish that (Table 9):
Figure 1: Strategic pillars
Actions
are designed to reflect 4 strategic ares, where the action is most needed: Knowledge, People, Infrasctruture
and Environment.
|
K1 –
Technologies
K2 – Business
Models
|
P1 – Policy-makers
P2 – Researchers and
Creators
P3 – Enablers
P4 –
Intermediaries
|
I1 – Services
Infrastructure
I2 –
Demonstration Infrastructure
I3 – R&D
Infrastructure
|
E1 – Legal &
Regulatory Environment
E2 – Standards
E3 – Incentives
|
Table 9: List of measures
|
No
|
Measures
|
Pillars and priorities (K, P, I, E)
|
|
1.
|
Creation of digitisation technologies
|
K1
|
|
1.1.
|
Preparation of the policy mix for implementation of the new S3
|
K1; E1
|
|
1.2.
|
Implementation of the new S3
|
K1; E1
|
|
2.
|
Adoption (import) of digitisation technologies
|
K1
|
|
2.1.
|
Identification and wider implementation of national and international
good practice
|
K1
|
|
2.2.
|
Identification of pilot projects to transfer and to test those
technologies defined as most influential in the digitisation of local
industry that could later lead to whole industrial development
|
K1
|
|
2.3.
|
Preparation of measures for larger-scale implementation of successful
pilots
|
K1
|
|
3.
|
Joining international technology development value chains (for
instance, international clusters, international R&D programmes)
|
K1
|
|
3.1.
|
A continuous call for an international partner search measure
|
K1; E3
|
|
3.2.
|
Preparation of co-financing schemes describing how Moldova will
support entities accepted into international consortiums and are awarded
grants that require co-financing
|
K1; E3
|
|
3.3.
|
Preparation of financing schemes for the funding of cross-sectoral
initiatives for participation (incl. operational costs) in international
networks, clusters, platforms, working/topic groups, etc.
|
K1; E3
|
|
4.
|
Development of industrial graduate programmes in
areas related to industry digitisation
|
K1; P2
|
|
5.
|
Development of safe and (cyber) secure technologies by design
|
K1
|
|
6.
|
Creation of business models oriented towards integration in
international value chains
|
K2
|
|
6.1.
|
Identification of pilot projects to transfer digital
technologies (implementation) management know-how from foreign countries that
are most relevant for the local industry and could later lead to whole
industrial development
|
K2; K1
|
|
6.2.
|
Preparation of measures for the larger-scale implementation of successful
pilots of digital technologies (implementation) management tools
|
K2; K1
|
|
7.
|
Continued support of measures for participation in international
knowledge dissemination networks (e.g. exhibitions, trade missions, and
through agents)
|
K2; E3
|
|
8.
|
Development and implementation of public servants' qualification
improvement and training programmes that cover industry digitisation
challenges
|
P1
|
|
9.
|
Support measure for the transfer of good practice from foreign
countries (e.g. pilot projects for transfer and adaptation of other
countries' good practice; triple-helix stakeholders' visits to good practice
countries to understand the implementation of policy measures)
|
P1; E3
|
|
10.
|
Revision, updating and preparation of study programmes, related to
industry digitisation
|
P2
|
|
11.
|
Renewal of teaching resources, laboratory equipment and learning tools
|
P2; I2
|
|
12.
|
Development of bachelor and master level digital manufacturing study
programmes and related bridging courses for college graduates
|
P2
|
|
13.
|
Development and implementation of interdisciplinary study programmes
(e.g. Smart Production Technologies & Robotics, IT & Robotics, Laser
cutting & Metalworking)
|
P2
|
|
14.
|
Development and implementation of vocational teachers' and lecturers'
qualification improvement and training programmes that cover industry
digitisation challenges
|
P2
|
|
15.
|
Creation of support measure for the use of infrastructure of business
clusters and open access centres by researchers (e.g. for qualification
improvement and training purposes)
|
P2; E3
|
|
16.
|
Private/public initiatives to attract talented professionals from
abroad
|
P2; E3
|
|
17.
|
Implementation of employee qualification improvement and training in
workplace programmes targeting the application of digital technologies (e.g.
by expanding the apprenticeship/vocational training model to encompass
workers as well as production technologists)
|
P3
|
|
18.
|
Recruitment of foreign students who potentially could work in local
industry companies after graduation
|
P3
|
|
19.
|
Integration of management and technology transfer study modules in
technological studies (e.g. engineering in digital manufacturing and related
studies)
|
P4
|
|
20.
|
Informal education programmes for the training of intermediaries and
possibilities for recognition
|
P4
|
|
21.
|
Systemic and regularly performed research in
forecasting and prediction of international value chains trends
|
I1
|
|
22.
|
Systemic and regularly performed research to identify industry needs
for support services (e.g. surveying companies, sectoral analysis)
|
I1
|
|
22.1.
|
Surveys on funding measures (evaluation of the measures, by surveying
participating companies immediately after a call for proposals ends)
|
I1
|
|
22.2.
|
Surveys on technologies for the identification of technologies of
current relevance to companies
|
I1
|
|
22.3.
|
Surveys for a sectoral analysis/review of value chains (monitoring and
analysis of existing and future value chains)
|
I1
|
|
23.
|
Creation of Digital Innovation Hubs (DIHs) service network
|
I1
|
|
23.1.
|
Pilot measure for the development of DIHs' service infrastructure
|
I1
|
|
23.2.
|
Mapping of potential DIHs (to identify which organizations can be
incorporated or join DIHs)
|
I1
|
|
23.3.
|
Prepare co-financing schemes showing how Moldova will support DIHs
accepted into international networks
|
I1; E3
|
|
23.4.
|
Permanent measure
|
I1
|
|
23.5.
|
Creation of conditions to connect to public infrastructure and
utilities governed by the state or municipalities (electricity, gas, water,
data necessary for Industry 4.0)
|
I1; E2
|
|
24.
|
Development of 5G network
|
I1
|
|
24.1.
|
Organization of auctions for 5G frequencies (3400-3800 MHz, 700 MHz)
|
I1; E2
|
|
24.2.
|
Allocation of 5G frequencies (3400-3800 MHz, 700 MHz) for commercial
uses
|
I1; E2
|
|
24.3.
|
Review and approval of changes to the hygienic norms of
electromagnetic radiation: increase the radiation threshold to equalize it to
the standard acceptable to the rest of Europe and application of changes to
the measurement methodology
|
I1; E2
|
|
24.4.
|
Easing of regulations (e.g. elimination of, or reduction in
conditions, to receive permissions, especially in the case of pico- and
microcell instalment)
|
I1; E2
|
|
24.5.
|
Establishment of opportunities for network operators to use public
infrastructure (e.g. lighting towers, buildings, chimneys, other objects) for
instalment of mobile network elements/equipment with conditions appropriate
to support 5G
|
I1; E2
|
|
24.6.
|
Development of infrastructure necessary for 5G alongside or during
implementation of governmental/municipal projects regarding transport and
energy
|
I1
|
|
24.7.
|
A developed 5G network
|
I1
|
|
25.
|
Development of digital technology demonstration infrastructure
|
I2
|
|
26.
|
Development of digital technology demonstration infrastructure
|
I2
|
|
26.1.
|
Development of the national digital technology demonstration concept
|
I2; E1
|
|
26.2.
|
Virtual factory (e.g. an interactive platform or a webpage with remote
control and simulations of technologies)
|
I2
|
|
26.3.
|
A measure for the development of 'digital twins' in factories
|
I2; E3
|
|
26.4.
|
Demonstration of exemplary digital technologies and digitisation
solutions based on national and international good practice
|
I2; K1
|
|
26.5.
|
Transfer of good practice from abroad (e.g. a technology demonstration
centre, where various technological solutions offered by a number of
companies, and their integration possibilities, are demonstrated on one site)
|
I2; K1
|
|
26.6.
|
Creation of 2 exemplary physical digital
technology demonstration centres alongside developers of digital technologies
|
I2
|
|
27.
|
Investment in Digital Innovation Hubs' (DIHs') infrastructure
necessary for the development of digital technologies
|
I3
|
|
27.1.
|
Pilot measure for the development of DIHs' innovation and R&D
infrastructure for digitisation services
|
I3
|
|
27.2.
|
Support for 4-5 infrastructure development projects for DIHs
|
I3
|
|
28.
|
Introduction of guidelines for IT/R&D public procurement
procedures
|
I3; E1
|
|
29.
|
A continued development of clusters' shared access centres for
innovation and R&D
|
I3
|
|
30.
|
Development of technology prototyping, testing and pilot production
infrastructure
|
I3
|
|
30.1.
|
Support for 4-5 infrastructure development projects for prototyping,
testing and pilot production
|
I3
|
|
30.2.
|
Support for the development of 4-5 competence centres running on an
open access model in the topic areas related to DIHs' activities
|
I3
|
|
31.
|
Creation of industry transformation strategy
|
E1
|
|
32.
|
Innovation system reform concerning industry digitisation
|
E1
|
|
33.
|
Refinement of work relations regulations
|
E1
|
|
34.
|
Issuance of regulation regarding service provision by Open Access
Centres (OACs)
|
E1
|
|
35.
|
Preparation of Digital Innovation Hubs (DIHs) development concept
|
E1
|
|
36.
|
Establishment and/or enforcement of regulation in intellectual
property dispute resolution - e.g. between researchers and universities,
between customers (businesses) and executors (universities)
|
E1
|
|
37.
|
Introduction of regulation for technology demonstration equipment use
and accounting (i.e. amortization, deductible expenses issues)
|
E1
|
|
38.
|
Elimination of obstacles to universities and research institutes
managing held infrastructure (land, buildings, equipment)
|
E1
|
|
39.
|
Development and implementation of standards to support industry
digitisation
|
E2
|
|
39.1.
|
Recognition of researchers' contribution to standardization work (similar
to traditional scientific publications)
|
E2
|
|
39.2.
|
Legislation to promote the application of standardisation as an
instrument for innovation development and economic growth
|
E2
|
|
39.3.
|
Promotion of the value of standards to support innovation
|
E2
|
|
39.4.
|
Implementation of standards associated with industry digitisation
|
E2
|
|
39.5.
|
Enforcement of compliance with the standards
|
E2
|
|
39.6.
|
Facilitation of conditions for connections to public infrastructure (incl.
adaptation of services to industry needs)
|
E2
|
|
40.
|
Promotion of interoperability
|
E2
|
|
41.
|
Building blocks for national and cross-border G2B services
|
E2
|
|
41.1.
|
Preparation of usability guidelines for Industry 4.0
|
E2; E1
|
|
41.2.
|
Enforcement of compliance with the usability guidelines
|
E2; E1
|
|
42.
|
Development of tax reliefs for promotion of industry digitisation
|
E3
|
|
42.1.
|
Creation of tax reliefs for accelerated capital allowance and hyper
and/or super-depreciation of tangible and intangible assets related to
digital technologies
|
E3
|
|
42.2.
|
Extension of a current tax relief regarding asset depreciation after
the year 2023
|
E3
|
|
42.3.
|
Implementation
|
E3
|
|
43.
|
Support for R&D in creation of digital technologies and digitisation support for prototyping and pilot production
|
E3
|
|
43.1.
|
Preparation of support schemes for R&D, prototyping and pilot
production in relation to S3
|
E3
|
|
44.
|
Support for implementation
of digital technologies
|
E3
|
|
44.1.
|
Preparation of support
schemes for implementation of digital technologies
|
E3
|
|
44.2.
|
Support projects
|
E3
|
|
44.3.
|
A separate measure for research groups' projects for
business (whereby the best scientists from all Moldova universities work
together to solve business problems)
|
E3
|
|
45.
|
Support for companies in the purchasing of services
related to digitisation (e.g. in the form of service bundles/service
packages, cheques)
|
E3
|
|
45.1.
|
Technology vouchers as a measure for production digitisation
|
E3
|
|
45.2.
|
Support projects
|
E3
|
|
46.
|
Uninterrupted support for digitisation and/or technological audits
(vouchers)
|
E3
|
|
46.1.
|
Preparation of support schemes for digitisation and/or technological
audits (vouchers)
|
E3
|
|
46.2.
|
Implementation
|
E3
|
|
47.
|
Support for attracting and retaining specialists, professional internships,
qualification improvement, training and retraining
|
E3; P2; P3
|
|
47.1.
|
Preparation of schemes for training at a workplace
(apprenticeship/vocational training) to obtain knowledge in working with
digital technologies
|
E3; P2; P3
|
|
47.2.
|
A voucher for the development of skills in working with digital
technologies
|
E3; P2; P3
|
|
47.3.
|
Implementation
|
E3
|
|
48.
|
Support for expansion of Digital Innovation Hubs (DIHs) and
integration in national and international networks
|
E3; I1
|
|
48.1.
|
Preparation of a measure for the extension of DIHs
|
E3; I1
|
|
48.2.
|
Implementation
|
E3; I1
|
5.
CONCLUSIONS AND RECOMMENDATIONS
The country's competitiveness is directly proportional to
the country's level of economic development. According to SWOT analysis, general strengths
on which Moldovan industry digitalisation will rely can be distinguished. It
relies on the fact that manufacturing sector output is increasing – the
contribution of the manufacturing sector to national GDP is around 12%, however it is on the lower side
compared to other EU countries. Despite that, recent years indicate the rise of the output of this
industry segment and industry digitisation will further encourage this process.
Secondly,
public and private IRT infrastructure is well-developed – is consistently
updated, provides world-class internet access, and allows faster digitization. Thirdly,
the growing capacity of digitization solutions providers - supply a wide range
of services by participating in local and global value chains.
Industry digitalization
will address weaknesses such as SMEs dominate the local industry with low-level
technology readiness, which currently limits investment in the overall
advancement of manufacturing.
Secondly, production is
dominated by contract manufacturing of low value-added products, which limits
the need for cutting-edge technological solutions and does not require much
cooperation between Moldovan research and industry.
Thirdly, discrepancies
appeared between academia and industry's needs and the digitization incentives
system is fragmented and has many elements with poorly functioning links between
them. Moreover, partnership culture develops slowly and hinders collaboration
and cooperation between major actors in the ecosystem and ordinary B2B
relationships.
Implementing these
measures are expected to grant the following benefits:
· Higher rankings/better ratings across a range of indicators
that measure the state's performance in digitization and/or innovation at
European level and globally
· An increased number of companies carrying out innovation
activities
· An increased number of companies that benefit from tax
reliefs
· A growing share of GDP generated by high-tech companies
· An increasing number of employees working in high-tech
companies
· A more effective innovation system
· Better adaptation to pan-European and global standards
· New services for businesses
· The national network of Digital Innovation Hubs that
provide specialized digitization services
· An increased ratio of medium to high-tech companies
compared to all companies
· An increased number of registered patents
· A reduced regulatory burden for companies carrying out
innovation activities
· An increased number of PhDs working in the field of
industry digitization
· Reviewed and updated study programmers
· New and interdisciplinary study programmers in relation to
industry digitization
· New scientific and technology demonstration equipment
· An increased number of professionals attracted to industry
from abroad
· Increased private company investments in innovation
activities
· Increased added-value generated by manufacturing
enterprises
· Increased manufacturing companies' turnover
· An increased number of projects funded via public-private
partnerships
· An increase of exports in identified value chains
· An increased number of companies that benefited from state
support to get involved in international value chains.
6.
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DIGITAL
TRANSFORMATION AS A FACTOR OF ENSURING COUNTRY COMPETITIVENESS: MOLDOVA CASE
ANALYSIS